MACAU SUCCESS LIMITED 澳門實德有限公司 · of Hong Kong, Guangdong and Macau in February 2009 had proposed to expand Shenzhen’s IVS to the entire Guangdong province. Such

* For identifi cation purpose only 僅供識別

MACAU SUCCESS LIMITED 澳門實德有限公司

Website 網頁 : www.macausuccess.com

*

澳門實德有限公司*MACAU SUCCESS LIMITED

(Incorporated in Bermuda with limited liability)

Stock Code 股份代號：00487

(於百慕達註冊成立之有限公司)

(1 October 2007 to 31 December 2008)

(二零零七年十月一日至

二零零八年十二月三十一日)

MA

CA

U SU

CC

ESS LIMIT

ED 澳門實德有限公司

AN

NU

AL R

EPOR

T 2008

年報

*

Designed and Printed by HeterMedia Services Limited

01 Our Vision

03 Corporate Information

04 Financial Highlights

05 Group Structure

06 Chairman’s Statement

09 Business Highlights

10 Management Discussion and Analysis

26 Corporate Governance Report

33 Report of Directors

41 Biographical Details of Directors and Senior Management

43 Report of Auditors

45 Consolidated Income Statement

46 Consolidated Balance Sheet

48 Balance Sheet

49 Consolidated Statement of Changes in Equity

50 Consolidated Cash Flow Statement

52 Notes to the Financial Statements

117 Five-year Financial Summary

Contents

To become a major player in the gaming, entertainment and tourist-

related industries in the Asia-Pacifi c region, and to create value for our

shareholders, customers and employees while committing to attain a

high standard of corporate governance.

Our Vision

2

3Macau Success Limited Annual Report 2008

Corporate Information

DIRECTORSExecutive Directors

Mr. Yeung Hoi Sing, Sonny (Chairman)Mr. Ma Ho Man, Hoffman (Deputy Chairman)

Non-executive Director

Mr. Choi Kin Pui, Russelle

Independent Non-executive Directors

Mr. Luk Ka Yee, Patrick

Mr. Yim Kai Pung

Ms. Yeung Mo Sheung, Ann

COMPANY SECRETARYMs. Chiu Nam Ying, Agnes

FINANCIAL CONTROLLERMr. Wong Chi Keung, Alvin

AUTHORISED REPRESENTATIVESMr. Ma Ho Man, Hoffman

Ms. Chiu Nam Ying, Agnes

AUDIT COMMITTEEMr. Yim Kai Pung (Chairman)Mr. Choi Kin Pui, Russelle



REMUNERATION COMMITTEEMr. Yeung Hoi Sing, Sonny (Chairman)Mr. Choi Kin Pui, Russelle


Mr. Yim Kai Pung


EXECUTIVE COMMITTEEMr. Yeung Hoi Sing, Sonny (Chairman)Mr. Ma Ho Man, Hoffman

AUDITORSCCIF CPA Limited

LEGAL ADVISORS ON HONG KONG LAWIu, Lai & Li

LEGAL ADVISORS ON BERMUDA LAWConyers Dill & Pearman

PRINCIPAL BANKERSChong Hing Bank Limited

Fubon Bank (Hong Kong) Limited

The Bank of East Asia, Limited

The Hongkong and Shanghai Banking Corporation Limited

PRINCIPAL SHARE REGISTRAR AND TRANSFER AGENT IN BERMUDAButterfi eld Fulcrum Group (Bermuda) Limited

Rosebank Centre

11 Bermudiana Road

Pembroke, HM 08, Bermuda

BRANCH SHARE REGISTRAR AND TRANSFER OFFICE IN HONG KONGTricor Tengis Limited

26th Floor

Tesbury Centre

28 Queen’s Road East

Wanchai, Hong Kong

REGISTERED OFFICEClarendon House

2 Church Street

Hamilton HM 11, Bermuda

HEAD OFFICE AND PRINCIPAL PLACE OF BUSINESSSuite 1601-2 & 8-10, 16/F.

Great Eagle Centre

23 Harbour Road

Wanchai, Hong Kong

SHARE LISTINGThe Stock Exchange of Hong Kong Limited

Stock Code: 00487

WEBSITEwww.macausuccess.com

4

Financial Highlights

Fifteen months ended Year ended 31 December 30 September 2008 2007 2006

HK$’000 HK$’000 HK$’000

ResultTurnover

Cruise leasing and management 118,000 95,901 95,717

Travel 509,254 7,853 7,813

627,254 103,754 103,530

(Loss)/profi t from operations (67,592 ) 34,069 48,917

(Loss)/profi t attributable to equity shareholders of the Company (238,304 ) 2,314 28,380

Balance sheetTotal assets 1,418,947 1,197,379 978,395

Total liabilities 487,788 170,466 11,475

Net assets 931,159 1,026,913 966,920

�Macau Success Limited Annual Report 2008

Group Structure

Macau Success LimitedHong Kong Listed Company with a focus on

Gaming, Entertainment and Tourist-Related Businesses

OTHER INVESTMENTPROJECT

CRUISE BUSINESS

M.V. Macau Success

TRAVELBUSINESS

Travel Success LimitedTravel Success (Macau) Limited

Jade Travel Group (Canada & New York)

Ponte 16 Integrated Casino-resort

6

Chairman’s StatementThe Group achieved a number of milestones during the period under review; our three-

pronged strategy had brought us closer to becoming a major player in the gaming,

entertainment and tourist-related industries in the Asia-Pacifi c region.


Chairman’s Statement

In August 2008, the Group established a strategic partnership

with SBI Macau Holdings Limited (“SBI Macau”), a wholly-

owned subsidiary of SBI Holdings, Inc. (“SBI Holdings”), one of

the largest venture capital fi rms and the largest online securities

company in Japan through its subsidiaries. That is the latest

strategic alliance the Company has formed after that with

Maruhan Corporation (“Maruhan”) in 2007. These alliances have

effectively created a strong regional business network for the

Group’s future growth in the gaming, entertainment and tourist-

related businesses in the Asia-Pacifi c region.

The Group’s next step would be to leverage on its extensive

experience and the connection of its Japanese partners to extend

its footprint in Japan and Taiwan’s travel and gaming markets.

In line with the Macau government’s plan to preserve and

revitalise the neighbourhood of Ponte 16, the Group will

continue to actively participate in initiatives that transform the

Inner Harbour into a tourist attraction, and to launch a wide

range of events at Ponte 16 in tandem with different festivals to

make Ponte 16 a landmark for people to gather during festive

occasions.

To Our Shareholders:

On behalf of the board of directors (the “Board” or “Directors”) of

Macau Success Limited (“Macau Success” or the “Company”),

I am pleased to present the annual report of the Company and

its subsidiaries (collectively the “Group”) for the fi fteen months

ended 31 December 2008.

2008 was a year of progress for the Group. Despite the global

fi nancial crisis and concerns over the economic downturn in

Asia had posed challenges to the gaming industry in Macau,

the Group continued to adopt its three-pronged strategy based

on travel, cruise, gaming and entertainment-related businesses

and achieved a number of major milestones during the period

under review.

Our fl agship project, Ponte 16, a world-class integrated

casino-entertainment resort, offi cially launched its casino

operation in February 2008, followed by the opening of Sofi tel

Macau At Ponte 16 and the high-limit betting area in August

and September respectively in the same year. As the only

integrated casino-entertainment resort featuring historical and

cultural elements in the Inner Harbour of Macau, Ponte 16 has

been well-received by tourists from all over the world with an

improving performance since its opening.

During the period, the Group took on new initiatives to build

a stronger platform for creating synergies among the Group’s

core businesses. In July 2008, the Group further strengthened

the international network of its travel business by acquiring 80%

equity interest in certain companies in Canada and the United

States of America (“US”) which conduct the business of air

travel consolidator, travel agent, tour provider and provider of

related services in Canada and US (the “Jade Travel Group”)

with extensive offi ce network in Canada and US. While we have

already established presence in the travel industry in Asia, the

acquisition of the Jade Travel Group enables our business to

extend its reach to North America. Such acquisition not only

has enhanced our travel business platform, it also facilitates

cross-selling with Ponte 16, thereby broadening the customer

base of the integrated casino-entertainment resort.

8

Chairman’s Statement

OPERATIONAL HIGHLIGHTS FOR THE PERIOD UNDER REVIEW

Travel Business

With the acquisition of the Jade Travel Group in July 2008, the

Group now has travel network that spans across Asia and North

America. The Jade Travel Group conducts the business of air

travel consolidator, travel agent, tour provider and provider of

related services with extensive offi ce network in Canada and

US. The Jade Travel Group is expected to bring synergetic

benefi ts to the Ponte 16 project and our cruise business.

Cruise Business

The leasing and management of the Group’s cruise ship, M.V.

Macau Success will continue to play a role in developing our

gaming, entertainment and tourist-related businesses of the

Group.

Investment Project – Ponte 16

As the only world-class integrated casino-entertainment resort

situated in Macau’s Inner Harbour, part of “The Historic Center

of Macao” which is a designated UNESCO World Heritage Site,

Ponte 16 enjoys a unique positioning relative to other casinos

in the enclave.

Despite the volatile economic environment, the efforts we have

put in to building a stronger and more integrated business

platform have begun to pay off. Sofi tel Macau At Ponte 16 has

recorded continued growth in occupancy rates since its opening

in August 2008. We also see a diversifying customer mix and an

increasing number of visitors from overseas.

OUTLOOKFor Macau, 2008 was a year of mix blessings. In the face of

volatile business environment, Macau continued to demonstrate

resilience. The statistics from the Statistics and Census Service

of the Macau government show that the gross gaming revenue

of Macau grew by approximately 30% from 2007 to reach MOP

109.8 billion in 2008. Thanks to the Macau government’s effort

in promoting tourism, Macau also recorded an approximately

11.8% growth in the number of visitor arrivals in 2008 compared

to the previous year, and at the same time, successfully

diversifi ed its source market with the number of visitors from

Southeast Asian countries increasing signifi cantly during the

past year, offsetting part of the effect brought by the tightening

of Individual Visit Scheme (IVS).

The Group remains cautiously optimistic about the future of

Macau’s gaming industry. Macau is the only Chinese city that

permits casino gaming, and its central location in Asia makes it

a convenient destination for visitors from countries in the region.

The Group believes Macau will maintain its position as the

leading leisure and gaming destination in Asia.

With the construction works of the Hong Kong-Zhuhai-

Macau Bridge expected to commence in late 2009, the

bridge is expected to boost traffi c between Hong Kong,

Macau and Zhuhai and improve tourism among the cities

upon its completion. In addition to the “Outline of the Plan for

the Reform and Development of the Pearl River Delta (2008-

2020)” promulgated in January 2009 by the Central People’s

Government of the People’s Republic of China, the governments

of Hong Kong, Guangdong and Macau in February 2009 had

proposed to expand Shenzhen’s IVS to the entire Guangdong

province. Such initiatives are expected to facilitate Macau’s

closer co-operation with Hong Kong and Guangdong province

and promote Macau’s economy.

Looking ahead, the Group will continue to adopt its three-

pronged strategy in travel, cruise, gaming and entertainment

businesses and explore opportunities not only in Macau but

also beyond the enclave to the Asia-Pacifi c region to fuel its

growth. Ponte 16 has unique competitive advantages such as

its partnership with Sociedade de Jogos de Macau, S.A., our

extensive management experience in casinos and VIP halls, its

central location in Macau’s historical district, and its world-class

architectural design with a unique European theme; while the

travel business enjoys a network that spans across Asia and

North America. Together, the gaming and travel businesses are

expected to drive the Group’s future revenue growth, while the

cruise business will continue to contribute stable revenue.

The Group believes the future holds considerable opportunities.

The execution of our three-pronged business strategy has

brought us closer to our goal of becoming a major player in

the gaming, entertainment and tourist-related industries in the

Asia-Pacifi c region. Our strong platform has prepared us to

seize further opportunities and to face challenges ahead. We

will continue to leverage on strengths to deliver valuable returns

to our shareholders.

APPRECIATIONLast but not least, I would like to extend my sincere gratitude

to our employees for their dedication and hard work. I would

also like to thank our customers, shareholders and business

partners for their strenuous support.

Yeung Hoi Sing, SonnyChairman

Hong Kong

16 April 2009


Business Highlights

• Commenced the operations of the casino of Ponte 16 and its hotel Sofi tel Macau At Ponte 16.

• Recruited Maruhan a leading player in the pachinko industry in Japan, as a shareholder of Macau Success and a strategic

partner in Ponte 16.

• Formed strategic partnership with SBI Macau, a wholly-owned subsidiary of SBI Holdings and entered into a letter of intent

with SBI Holdings in relation to any future investment or carrying on of any casino and related entertainment, resort business

and real estate business in Japan.

• Acquisition of the entire issued share capital of Smart Class Enterprises Limited (“Smart Class”), being a company indirectly

owns 80% equity interest in certain companies in Canada and US, which conduct the business of air travel consolidator, travel

agent, tour provider and provider of related services, with extensive offi ce network in Canada and US.

10

Management Discussion And AnalysisThe year 2008 marks a number of milestones for the Group as it continued to deliver

results on its three-pronged strategy by leveraging on synergies among its core

businesses: travel, cruise, gaming and entertainment.


Management Discussion and Analysis

The year 2008 marks a number of milestones for Macau

Success Limited (“Macau Success” or the “Company”) and its

subsidiaries (collectively the “Group”) as the Group continued

to deliver results on its three-pronged strategy by leveraging

on synergies among its core businesses: travel, cruise, gaming

and entertainment. The Group offi cially commenced the casino

operations and the hotel operations of its fl agship investment

project Ponte 16 in February 2008 and August 2008 respectively.

The Group also embarked on a number of strategic initiatives

and successfully paved the way for future growth.

During the reporting period, the Board resolved to change the

fi nancial year end date of the Company from 30 September

to 31 December in order to enable the Group, as well as the

associates of the Company relating to the Group’s fl agship

investment project, Ponte 16 (the “Associates”) to have a

coterminous year end date. Accordingly, the fi nancial period

under review covered the fi fteen months from 1 October 2007

to 31 December 2008, which may not be comparable with the

results of the Group for the twelve months ended 30 September

2007 (the “last corresponding year”).

The following discussion should be read in conjunction with

the consolidated fi nancial statements and the related notes

included in this annual report.

RESULTS

For the fi fteen months ended 31 December 2008, the turnover

of the Group was approximately HK$627.3 million, compared

to the last corresponding year of approximately HK$103.8

million. Gross profi t was approximately HK$134.6 million (2007:

approximately HK$95.7 million). Loss attributable to equity

shareholders of the Company amounted to approximately

HK$238.3 million, compared to a profi t attributable to equity

shareholders of the Company of approximately HK$2.3 million in

the last corresponding year. Loss per share for the reporting period

was 9.87 HK cents (earnings per share in 2007: 0.11 HK cents).

The substantial increase in turnover of the Group for the period

under review was mainly attributable to the contribution from the

Jade Travel Group (as defi ned below under sub-section headed

“Travel Business”) in which 80% equity interest was acquired by

the Group in July 2008.

The loss incurred during the period under review was mainly

attributable to loss incurred by the cruise business which has

been adversely affected by high fuel oil and operating costs and

impairment of other receivables, as well as the loss shared by

the Group from the Associates. The loss shared by the Group

from the Associates for the period under review amounted to

approximately HK$170.3 million (2007: approximately HK$15.5

million), which was mainly attributable to the depreciation

charges and high operating costs in the initial stage of operation

of the business of Ponte 16. The Company issued a profi t

warning announcement on 20 February 2009 to convey these

messages to its shareholders and potential investors.

On 29 October 2007, the Company through its wholly-

owned subsidiary, Golden Sun Profi ts Limited (“Golden

Sun”), disposed to Maruhan Corporation (“Maruhan”) of

10.2% of the entire issued share capital of, and related

shareholder’s loan to, World Fortune Limited (“World

Fortune”) for a consideration of approximately HK$208.5

million. World Fortune mainly owns a 49% equity interest in

Pier 16 – Property Development Limited (“Pier 16 – Property

Development”).

12


In connection with preparing the unaudited interim results for the

six months ended 31 March 2008 and the twelve months ended

30 September 2008, the Directors referred to the valuation report

issued for the put option, valued at HK$198,000, the option

of which was granted to Maruhan at the date of completion

of the disposal on 29 October 2007. The Directors considered

that the fair value of the put option to be nominal and therefore

made a critical accounting judgement that substantially all the

risks and rewards of ownership of the 10.2% equity interest in

World Fortune had been transferred to Maruhan. Accordingly,

the Group recognized a gain of HK$116,992,000 on partial

disposal of World Fortune for the six months ended 31 March

2008 and the twelve months ended 30 September 2008.

However, in connection with preparing the fi nancial statements

for the period ended 31 December 2008, the directors took

into consideration the state of economy which was highly

volatile. The updated valuation for the put option on completion

date was HK$3,599,000 and was used by the auditors of the

Company for audit purpose. The updated valuation and the

volatile economy point to the possibility of Maruhan exercising

the put option to be not remote.

In view of the above matters, the Directors therefore made a

critical accounting judgement that all the risks and rewards of

ownership of the 10.2% equity interest in World Fortune had

not been substantially transferred to Maruhan. Accordingly, the

Group retains substantially all the risks and rewards of ownership

of the 10.2% equity interest in World Fortune and therefore

accounts for World Fortune as a wholly-owned subsidiary of

the Group. Accordingly, the consideration received has been

recognised as liabilities and classifi ed under long-term payables

in the consolidated balance sheet.

DIVIDENDS

No interim dividend was paid during the period under review

(2007: Nil). The Directors do not recommend any payment of a

fi nal dividend for the fi fteen months ended 31 December 2008

(2007: Nil).


14


Travel BusinessThe Group’s travel business spans across Asia and North America, building a stronger

platform to create synergies among the Group’s core businesses.


Management Discussion and AnalysisTravel Business

The Group’s travel business spans across Asia and North

America. In addition to Travel Success Limited and Travel

Success (Macau) Limited which Macau Success owns and

operates in Hong Kong and Macau respectively, the Group also

owns 80% of the equity interest in certain companies in Canada

and the United States of America (“US”) which conduct the

business of air travel consolidator, travel agent, tour provider and

provider of related services in Canada and US (the “Jade Travel

Group”) following the completion of the acquisition of the Jade

Travel Group in July 2008. With an extensive offi ce network in

Vancouver, Calgary, Toronto, Montreal in Canada and also New

York in US, the Jade Travel Group offers sophisticated travel

plans and tailor-made inbound and outbound tour packages

to customers. Through these companies, the Group is able

to provide one-stop travel services to local and multinational

corporations and up-market leisure travelers.

REVIEW OF OPERATIONS

The Group’s travel business became the major contributor

to the Group’s total turnover during the period under review,

accounting for 81.2%, or approximately HK$509.3 million, of the

Group’s total turnover. That represents a surge of approximately

HK$501.4 million, or 6,384.8% over the last corresponding year.

Segment profi t from travel business was approximately HK$2.7

million (2007: loss of approximately HK$0.5 million).

The tremendous growth in turnover for the period under review

was mainly attributable to the contribution from the Jade Travel

Group, in which 80% equity interest was acquired by the Group

in July 2008.

In line with the Group’s strategy to build a stronger platform

to create synergies among the Group’s core businesses, the

Group acquired the Jade Travel Group through its acquisition

of the entire issued share capital of Smart Class Enterprises

Limited (“Smart Class”), which owns as to 80% equity interest

in the Jade Travel Group, a major air travel consolidator, travel

agent, tour provider and provider of related services with

extensive offi ce network in Canada and US. The acquisition of

the Jade Travel Group not only has enhanced the Group’s travel

business platform with inbound and outbound tours to and from

North America, but also facilitates cross-selling with Ponte 16,

thereby broadening the customer base of the integrated casino-

entertainment resort and the Group’s cruise ship, M.V. Macau

Success.

The Group has a very clear focus on providing high-end

customers with a wide range of one-stop travel services.

Moreover, the travel agencies provide the Group a platform to

promote and offer exclusive packages on Ponte 16 and the

cruise trips. Going forward, the Group will heighten its effort in

tour packages promotions for growth potential.

16


Cruise BusinessMacau Success engages in the cruise business through leasing and management of

the Group’s cruise ship, M.V. Macau Success. During the reporting period, the cruise

business continued to contribute stable turnover to the Group.


Management Discussion and AnalysisCruise Business

Macau Success engages in the cruise business through leasing

and management of the Group’s cruise ship, M.V. Macau

Success, a luxury cruise ship with world-class casino and

various entertainment facilities. The cruise has 230 passenger

rooms and can accommodate as many as 512 passengers.

The cruise ship operates on a daily basis from Hong Kong to

international waters.


During the reporting period, the cruise business continued

to contribute stable turnover to the Group. For the fi fteen

months ended 31 December 2008, turnover from the cruise

business amounted to approximately HK$118.0 million (2007:

approximately HK$95.9 million), accounting for 18.8% of the

Group’s total turnover. Segment loss from the cruise business

was approximately HK$1.7 million (2007: profi t of approximately

HK$32.0 million), which was mainly due to the increase in fuel

oil and operating costs and impairment of other receivables

during the period under review.

18


Investment Project – Ponte 16The casino operation of Ponte 16 offi cially commenced in February 2008. Its fi ve-star

hotel Sofi tel Macau At Ponte 16 and the high-limit betting area also opened in August and

September in the same year respectively.


Management Discussion and AnalysisInvestment Project – Ponte 16

Ponte 16 is a world-class integrated casino-entertainment

resort located in the Inner Harbour of Macau, comprising a

fi ve-star luxury hotel – Sofi tel Macau At Ponte 16, a casino, a

shopping arcade, and food and beverage facilities. Featuring

a unique European theme infused with Chinese elements,

Ponte 16 situates on the original location of Pier 16, which has

been in operation since the early 20th century and is now one

of Macau’s historical landmarks. Ponte 16 is the only resort

situated in Macau’s Inner Habour just across a fi ve-minute ferry

ride to Wanzai, Zhuhai and with close proximity to Gongbei

bridge border crossing, making it conveniently accessible to

tourists.

As the Group’s fl agship project, Ponte 16 achieved a number of

milestones during the period under review. The casino operation

of Ponte 16 offi cially commenced in February 2008. Its fi ve-

star hotel Sofi tel Macau At Ponte 16 and the high-limit betting

area also opened in August and September in the same year

respectively. As the only integrated casino-entertainment resort

featuring historical and cultural elements in the Inner Harbour

of Macau, Ponte 16 has been well-received by tourists from all

over the world.


As at 31 December 2008, the casino had 97 gaming tables,

eight of which were high-roller tables, plus 278 slot machines.

During the period under review, the average number of visitors

per day since the opening of Ponte 16 was around 10,000

with the highest number of visitors recorded in one single day

amounted to 30,000 during the Chinese New Year period in

2008. Average daily mass drop during the period under review

was approximately HK$13 million. With the opening of the

VIP hall of the casino and the VIP mansion The Mansion At

Sofi tel at Sofi tel Macau At Ponte 16 in the second half of 2009,

management of the Company (the “Management”) expects the

performance of the casino to be improved further.

Managed by the world-renowned hotel management group, the

Accor Group, Sofi tel Macau At Ponte 16 has 408 guest rooms,

including 363 guest rooms, 26 suites and an exclusive block of

The Mansion at Sofi tel with 19 units. Since its opening, Sofi tel

Macau At Ponte 16 has attracted high-end guests with its top-

class services and high-end hotel facilities, with a steady growth

in its occupancy rate. The Management expects occupancy rate

to be improved further with the opening of more new amenities

in the future.

To tie-in the launch of Ponte 16, considerable effort had been

put in marketing and promotion. Coupled with higher operating

costs incurred in the initial stage of operation and depreciation

charges, the loss incurred by Ponte 16 shared by the Group

during the period under review amounted to approximately

HK$170.3 million. The six-month delay in obtaining the hotel

license for Sofi tel Macau At Ponte 16 also had a negative

impact on Ponte 16’s profi tability during the reporting period.

Nonetheless, the Management believes the unique attractions

of Ponte 16 and the marketing efforts of both Ponte 16 and

the Accor Group would stand Ponte 16 in good stead for

growth and become the Group’s primary growth driver in the

foreseeable future.

20


OthersDuring the period under review, the Group had made several strategic moves to build a

stronger business platform for its future development.


Management Discussion and AnalysisOthers

FINANCIAL REVIEW

Liquidity, Financial Resources and Gearing

As at 31 December 2008, the Group had net current assets of

approximately HK$56.4 million (30 September 2007: approximately

HK$101.2 million) and had net assets of approximately HK$931.2

million (30 September 2007: approximately HK$1,026.9 million).

As at 31 December 2008, the Group did not have any interest-

bearing bank borrowings and fi nancial lease obligations (30

September 2007: Nil). As at 31 December 2008, the Group had

interest-bearing loan from a related company of approximately

HK$17.6 million (30 September 2007: Nil). The loan is unsecured

and charged with interest at the rate of 4% per annum on the

principal amount and have no fi xed terms of repayment.

As at 31 December 2008, there were loans from minority

shareholders of approximately HK$8.7 million (30 September 2007:

Nil) and other loan payable of approximately HK$159.2 million (30

September 2007: Nil). The loans are interest-free, unsecured and

will not be repaid within the next twelve months.

Equity attributable to equity shareholders of the Company as at

31 December 2008 was approximately HK$884.8 million (30

September 2007: approximately HK$976.9 million).

Accordingly, the gearing ratio, which was measured on the basis

of the interest-bearing borrowings of the Group over equity

attributable to equity shareholders of the Company, was 1.99% as

at 31 December 2008 (30 September 2007: Nil).

Pledge of Assets

As at 31 December 2008, the Group pledged the time deposits of

approximately HK$6.8 million (30 September 2007: approximately

HK$0.8 million) to certain banks for issuance of several bank

guarantees of approximately HK$8.4 million (30 September 2007:

approximately HK$0.8 million) for operation of the Group.

As at 31 December 2008, the Company pledged the time deposits

of CAD0.9 million (equivalent to approximately HK$6.0 million) (30

September 2007: Nil) to a bank for issuance of a standby letter of

credit facility of up to CAD1.2 million (equivalent to approximately

HK$7.7 million) (30 September 2007: Nil) for operation of Jade

Travel Ltd. (Canada).

As at 31 December 2008, World Fortune pledged all (30 September

2007: 100%) of its shares in Pier 16 – Property Development to

a bank, for and on behalf of the syndicate of lenders, in respect

of the syndicated loan facilities granted to Pier 16 – Property

Development.

Contingent Liabilities

As at 31 December 2008, the Group gave the following

undertaking:

Syndicated loan facilities granted to an associate held by a

subsidiary of the Company was HK$1,600 million (30 September

2007: HK$1,600 million). The maximum guarantee amount borne

by the Company was HK$860 million (30 September 2007:

HK$860 million). The total loan outstanding for the syndicated loan

facilities of the associate at the balance sheet date was HK$1,260

million (30 September 2007: HK$1,010 million).

As at 31 December 2008, the Company issued a guarantee

of HK$7,749,000 in favor of a bank for banking facilities of

HK$7,749,000 granted to a subsidiary. The maximum guarantee

amount borne by the Company was HK$7,749,000. The directors

do not consider it probable that a claim will be made against the

Company.

Human Resources

As at 31 December 2008, the Group had a total of 440 employees.

Remuneration is determined on the basis of qualifi cation,

experience, responsibility and performance.

22

Management Discussion and AnalysisOthers (Continued)

Apart from the basic remuneration, staff benefi ts include medical

insurance and retirement benefi ts under the Mandatory Provident

Fund Scheme. Share options might also be granted to eligible

employees of the Group as a long-term incentive.

CORPORATE INITIATIVES

During the period under review, the Group had made several

strategic moves to build a stronger business platform for its future

development.

Partnership with Maruhan

On 29 October 2007, the Company through its wholly-owned

subsidiary, Golden Sun, disposed to Maruhan of 10.2% of the

entire issued share capital of, and related shareholder’s loan to,

World Fortune for a consideration of approximately HK$208.5

million. World Fortune mainly owns a 49% equity interest in Pier 16

– Property Development.

Yet, after taking into consideration the state of economy which

is highly volatile, the updated valuation of the put option on

completion date was HK$3,599,000 and was used by the auditors

of the Company for audit purpose, this indicates the possibility of

Maruhan exercising the put option is not remote. Therefore, the

above transaction, together with the option granted, does not

constitute a disposal as the Group still retains substantially all the

risks and rewards of ownership of the sale shares after completion of

this transaction. Accordingly, the Group shall continue to recognise

the 10.2% equity interest in World Fortune after completion of this

transaction.

The Company and Maruhan also entered into a subscription

agreement in October 2007, pursuant to which Maruhan has

subscribed for and the Company has allotted and issued 220 million

new shares of the Company at a subscription price of HK$1.062

each. Besides, Maruhan also acquired 220 million shares of the

Company from the market in October 2007.

Consequently, Maruhan currently holds approximately 18%

interest in the Company and has become a strategic investor of

the Company.

Maruhan, a leading Japanese company in the pachinko industry

with more than 1 million memberships and extensive business

network in Japan, is expected to bring more Japanese and Korean

customers to Ponte 16.

Acquisition of the Jade Travel Group

On 31 July 2008, the Company acquired the entire issued

share capital of Smart Class for CAD2.9 million (equivalent to

approximately HK$22.6 million), which was settled by the allotment

and issue of 19.5 million new shares of the Company at an agreed

issue price of HK$1.16 per share on the same date pursuant to a

conditional sale and purchase agreement dated 5 May 2008. The

fair value of the shares allotted on 31 July 2008 was HK$1.12 per

share. The principal asset of Smart Class is its 80% equity interest

in the Jade Travel Group. Since then, the Company has indirectly

held 80% equity interest in the Jade Travel Group.


Management Discussion and AnalysisOthers (Continued)

With the extensive offi ce network of the Jade Travel Group in

Vancouver, Calgary, Toronto, Montreal in Canada and New York

in US, the Group’s international network in the travel business has

been strengthened substantially, paving the way for the Company

to create synergies for other business segments by cross-selling

integrated casino-entertainment resort and tour packages.

Partnership with SBI Macau

On 7 July 2008, the Company entered into a letter of intent with SBI

Holdings, Inc. (“SBI Holdings”) in relation to the future investment

or carrying on of any casino and related entertainment and resort

business as well as real estate business in Japan.

On 8 August 2008, the Company through its wholly-owned

subsidiary, Favor Jumbo Limited, sold and assigned to SBI Macau

Holdings Limited (“SBI Macau”), a wholly-owned subsidiary of

SBI Holdings, 4.55% of the entire issued share capital of, and

related shareholder’s loan to, Golden Sun for a total consideration

of HK$130 million, pursuant to a conditional sale and purchase

agreement dated 7 July 2008.

Yet, according to HKAS 39, this transaction, together with the

option granted, does not constitute a disposal as the Group still

retains substantially all the risks and rewards of ownership of the

sale shares after completion of this transaction. Accordingly, the

Group shall continue to recognise the 4.55% equity interest in

Golden Sun after completion of this transaction.

SBI Holdings and its subsidiaries are principally engaged in asset

management, brokerage and investment banking, housing and real

estate businesses and the provision of other fi nancial services. The

Company will benefi t from SBI Macau’s extensive experience in

asset management and real estate development and SBI Holdings

can provide funding and investment recommendations to Ponte

16.

24


ProspectsThe Board is upbeat on the prospects of the Group. With an enhanced and diversifi ed

platform, the Group is in a good position to weather the challenges ahead and to seize

upcoming opportunities.


Management Discussion and AnalysisProspects

Looking ahead, despite the uncertain global economic environment,

the Group, with its enhanced platform, is prepared to take on

challenges and opportunities ahead.

In 2009, the Group will continue to adopt its three-pronged

strategy to maximise its growth potential. The Group will focus

on developing its travel business into a unique platform to create

synergies among the core businesses of the Group. With an

extensive network in Canada and US, the Jade Travel Group is

expected to bring synergetic benefi ts to the Ponte 16 project. The

next step for the Group would be to leverage on the extensive

experience and connection of its Japanese partners to expand

the Group’s travel and gaming businesses to Japan and Taiwan

markets in the future. The expanded travel platform and network

can enrich customer mix of Ponte 16.

As Ponte 16 is the fl agship project of the Group, Macau Success

will take proactive measures to increase traffi c to Ponte 16.

Maruhan’s involvement will induce ample sources of Japanese

and Korean visitors and further broaden our customer base. With

the construction works of the Hong Kong-Zhuhai-Macau Bridge

expected to commence in late 2009 and the tighter collaboration

among Hong Kong, Guangdong and Macau governments, such

initiatives are expected to boost traffi c and tourism in these cities.

Ponte 16 will also benefi t from the Macau government’s policies

and plans to preserve and revitalize the neighborhoods of Ponte 16

which is Macau’s historical centre. The Group is also dedicated to

promote Ponte 16 as a distinctive landmark for celebration in festive

seasons through organizing various events. Amid the challenging

operating environment, the Management will strengthen the cost

control on the operation of the Ponte 16 project and enhance

effi ciency to improve operating margins.

Leveraging on the strategic partnerships with Maruhan and SBI

Holdings, the Group will further explore gaming and entertainment

business opportunities in the Asia-Pacifi c region. This initiative will

accelerate the Group’s future growth in the region and bring it closer

to its goal of becoming a major player in the gaming, entertainment

and tourist-related businesses in the Asia-Pacifi c region.

The Board is upbeat on the prospects of the Group. The Group will

stay on track and continue to execute its three-pronged strategy.

Amid the global economy slowdown, the Management would

be prudent in the formation and implementation of corporate

strategies. With an enhanced and diversifi ed platform which

comprises travel, cruise, gaming and entertainment businesses,

the Group is in a good position to weather the challenges ahead

and to seize upcoming opportunities.

26

Corporate Governance Report

Macau Success Limited (the “Company”) is committed to maintain high corporate governance standard and procedures to ensure

the integrity, transparency and quality of disclosure in order to enhance the shareholders’ value.

CORPORATE GOVERNANCE PRACTICES

In the opinion of the directors of the Company (“Director(s)”), the Company has applied the principles and complied with all the code

provisions as set out in the Code on Corporate Governance Practices contained in Appendix 14 of the Rules Governing the Listing of

Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”) during the fi fteen months ended 31 December 2008.

DIRECTORS’ SECURITIES TRANSACTIONS

The Company has adopted a code of conduct regarding securities transactions by Directors (the “Code of Conduct”) on terms no

less exacting than the required standard of the Model Code for Securities Transactions by Directors of Listed Issuers (the “Model

Code”) as set out in Appendix 10 of the Listing Rules.

Having made specifi c enquiry of all Directors, each of whom has confi rmed his/her compliance with the required standard set out in

the Code of Conduct and the Model Code throughout the fi fteen months ended 31 December 2008.

BOARD OF DIRECTORS

The board of Directors (the “Board”), led by its chairman (the “Chairman”), Mr. Yeung Hoi Sing, Sonny, is responsible for overseeing

the management of the business and affairs, considering and approving strategic plans and major corporate matters, as well

as reviewing operational and fi nancial performance. The Board is committed to make decisions in the best interests of both the

Company and its shareholders.

The Board currently consists of six members, including two executive Directors, namely Mr. Yeung Hoi Sing, Sonny (Chairman) and

Mr. Ma Ho Man, Hoffman (Deputy Chairman); a non-executive Director, namely Mr. Choi Kin Pui, Russelle (the “NED”); and three

independent non-executive Directors, namely Mr. Luk Ka Yee, Patrick, Mr. Yim Kai Pung and Ms. Yeung Mo Sheung, Ann (“INEDs”).

The Directors’ biographical information is set out on pages 41 and 42 under the heading “Biographical Details of Directors and Senior

Management”.

The roles of the Chairman and the Deputy Chairman of the Board (“Deputy Chairman”) who performs the function of chief executive

offi cer are segregated and assumed by separate individuals to strike a balance of power and authority so that power and job

responsibilities are not concentrated in any one individual of the Board. The Chairman, Mr. Yeung Hoi Sing, Sonny, is responsible for

overseeing the function of the Board and formulating overall strategies and policies of the Company, while the Deputy Chairman, Mr.

Ma Ho Man, Hoffman, is responsible for managing the Group’s business and overall operations. The functions and responsibilities

between the Chairman and the Deputy Chairman are clearly segregated.



During the period under review, Mr. Lee Siu Cheung, a former executive Director and Deputy Chairman performed, in addition to

Mr. Ma Ho Man, Hoffman, the function of the chief executive offi cer before his resignation on 1 June 2008.

Save as Mr. Ma Ho Man, Hoffman is the nephew of Mr. Yeung Hoi Sing, Sonny, to the best knowledge of the Directors, there is no

fi nancial, business, family and/or other material/relevant relationship among members of the Board and between the Chairman and

the Deputy Chairman who performs the function of chief executive offi cer.

The Board includes three INEDs and one of them, Mr. Yim Kai Pung, is an associate member of Hong Kong Institute of Certifi ed

Public Accountants and a fellow member of The Association of Chartered Certifi ed Accountants of the United Kingdom. He has

over 18 years of experience in auditing, taxation and provision of fi nance consultancy services for companies in Hong Kong and the

People’s Republic of China.

The Company has received from each of the INEDs an annual confi rmation of his/her independence pursuant to Rule 3.13 of the

Listing Rules and considers all of the INEDs to be independent.

During the period under review, the NED and all INEDs have entered into service contracts with the Company for a term of one year.

None of the NED and INEDs has entered into any service contracts with the Company which is not determinable by the Company

within one year without payment of compensation, other than statutory compensation. In March 2009, the NED and all INEDs have

entered into new service contracts with the Company for a term of period from 30 March 2009 to 31 December 2009, and each of

the NED and INEDs is entitled to a director’s fee of approximately HK$79,685 (being the proportional amount of the annual director’s

fee determined by the Board, i.e. HK$105,000) for the period of appointment under the new service contract.

Pursuant to the Bye-laws of the Company, all Directors appointed by the Board shall hold offi ce until the next following general

meeting of the Company (in case of fi lling a casual vacancy) or until the next following annual general meeting of the Company (in

case of an addition to the number of Directors) after their appointment and the retiring Director shall be eligible for re-election. In

addition, at each annual general meeting of the Company, one-third of the Directors shall retire from offi ce by rotation such that all

Directors should be subject to retirement by rotation at least once every three years.

The Board meets regularly throughout the fi fteen months period ended 31 December 2008 as and when required. Notices of

at least 14 days are given to all Directors for all regular Board meetings. The company secretary of the Company assists the

Chairman in preparing the agenda for the meetings and all Directors are consulted to include any matters in the agenda. Agenda and

accompanying board papers are given to all Directors in a timely manner and at least 3 days before the appointed date of meeting.

28


During the period under review, fi ve regular Board meetings and four non-regular Board meetings were held. Details of the Directors’

attendance at the said Board meetings are set out below:

Number of Board meetings

Directors attended/held

Executive Directors

Mr. Yeung Hoi Sing, Sonny (Chairman) 7/9

Mr. Lee Siu Cheung (Deputy Chairman) 4/4

(resigned with effect from 1 June 2008)

Mr. Ma Ho Man, Hoffman (Deputy Chairman) 9/9


Mr. Choi Kin Pui, Russelle 9/9

Independent non-executive Directors

Mr. Luk Ka Yee, Patrick 8/9

Mr. Yim Kai Pung 9/9

Ms. Yeung Mo Sheung, Ann 9/9

The Board has agreed on a procedure to enable the Directors to seek independent professional advice in appropriate circumstances,

at the Company’s expense, to assist them to discharge their duties. Adequate, complete and reliable information is provided to the

Directors in a timely manner to keep them abreast of the Group’s latest developments and any major changes to the relevant rules

and regulations and thus can assist them in discharging their duties.

DELEGATION BY THE BOARD

The Board has established three Board committees, namely the audit committee (the “Audit Committee”), the remuneration

committee (the “Remuneration Committee”) and the executive committee (the “Executive Committee”) to oversee particular aspects

of the Company’s affairs and to assist in sharing the Board’s responsibilities. The Board has reserved for its decision or consideration

on matters covering corporate strategy, annual and interim results, changes of members of the Board and its committees, major

acquisitions, disposals and capital transactions, and other signifi cant operational and fi nancial matters. All the Board committees

have clear written terms of reference and have to report to the Board regularly on their decisions and recommendations. The

day-to-day running of the Company, including implementation of the strategies and plans adopted by the Board and its committees,

is delegated to management with divisional heads responsible for different aspects of the business.



AUDIT COMMITTEE

The Company formulated written terms of reference for the Audit Committee in accordance with the requirements of the Listing

Rules, full text of which is available on the Company’s website. The Audit Committee currently consists of the NED and all INEDs

and is chaired by Mr. Yim Kai Pung who possesses appropriate professional accounting qualifi cation as required under the Listing

Rules.

The primary duties of the Audit Committee include, inter alia, monitoring integrity of the fi nancial statements of the Company and

ensuring objectivity and credibility of fi nancial reporting, reviewing the internal control system of the Group as well as overseeing the

relationship with the external auditors of the Company.

During the period under review, fi ve Audit Committee meetings were held and several resolutions in writing were passed by all

members of the Audit Committee. Details of attendance of the Audit Committee members at the said Audit Committee meetings

are set out below:

Number of Audit Committee

Audit Committee members meetings attended/held

Mr. Yim Kai Pung (Chairman of the Audit Committee) 5/5




During the period under review, the Audit Committee had considered, reviewed and/or discussed (1) the auditing and fi nancial

reporting matters; (2) the appointment of external auditors including the terms of engagement; (3) the annual and interim results; (4)

the effectiveness of the internal control system of the Group; (5) the change of fi nancial year end date of the Company; and (6) the

fi nancial performance of the Group as well as its associates. Each member of the Audit Committee has unrestricted access to the

external auditors and all senior staff of the Group.

REMUNERATION COMMITTEE

The Company formulated written terms of reference for the Remuneration Committee in accordance with the requirements of

the Listing Rules, full text of which is available on the Company’s website. The Remuneration Committee currently consists of

the Chairman of the Board, the NED and all INEDs with Mr. Yeung Hoi Sing, Sonny acts as the chairman of the Remuneration

Committee.

The major responsibilities of the Remuneration Committee are to make recommendation to the Board on the Company’s policy

and structure for remuneration of the Directors and senior management of the Company (the “Senior Management”) and on the

establishment of a formal and transparent procedure for developing remuneration policy and to determine specifi c remuneration

packages of all executive Directors and the Senior Management. The Remuneration Committee takes into consideration on

factors such as salaries paid by comparable companies, time commitment and responsibilities of the Directors and the Senior

Management.

30


During the period under review, one Remuneration Committee meeting was held and several resolutions in writing were passed

by all members of the Remuneration Committee for, inter alia, reviewing the remuneration policy and structure for all Directors and

the Senior Management, and reviewing and/or determining remuneration packages of certain executive Directors and the Senior

Management respectively. Details of attendance of the Remuneration Committee members at the said Remuneration Committee

meeting are set out below:

Number of Remuneration Committee

Remuneration Committee members meeting attended/held

Mr. Yeung Hoi Sing, Sonny (Chairman of the Remuneration Committee) 1/1



Mr. Yim Kai Pung 1/1


EXECUTIVE COMMITTEE

The Executive Committee was established by the Board with specifi c written terms of reference in November 2006. It currently

consists of all executive Directors, namely Mr. Yeung Hoi Sing, Sonny and Mr. Ma Ho Man, Hoffman with Mr. Yeung Hoi Sing,

Sonny acts as the chairman of the Executive Committee. The Executive Committee is responsible for reviewing and approving, inter

alia, any matters concerning the day-to-day management, business and operation affairs of the Company, and any matters to be

delegated to it by the Board from time to time.

NOMINATION OF DIRECTORS

The Company did not establish a nomination committee and the Board is responsible for reviewing its size, structure and composition

(including the skills, knowledge and experience of its members) from time to time as appropriate to ensure that the Board has a

balance of skills and experience appropriate for the business of the Company. Besides, the Board is responsible for considering

any appointment of its own members and making recommendations to the shareholders of the Company (the “Shareholders”) on

Directors standing for re-election at the general meeting following their appointments and retirement by rotation.

During the period under review, no new member was appointed to the Board. The Board has recommended the re-appointment

of the Directors standing for re-election at the annual general meeting of the Company held on 28 February 2008 (“2008 Annual

General Meeting”), and has also considered the appointment of Mr. Ma Ho Man, Hoffman as the Deputy Chairman in replacement

of Mr. Lee Siu Cheung.



INTERNAL CONTROLS

The Board is responsible for ensuring that the Group maintains sound and effective internal control system so as to safeguard the

investment of the Company’s shareholders and the assets of the Group. The Company has annually engaged an independent

professional fi rm (“Independent Professional Firm”) to review the internal control system of the Group which cover all material

controls, including fi nancial, operational and compliance controls as well as risk management functions. During the period under

review, an Independent Professional Firm has conducted a review of the internal control system of the Group for the year ended

30 September 2007 and the relevant review report has been considered by the Audit Committee for conducting its review on the

effectiveness of the said internal control system. The Board, through the reviews made by the Independent Professional Firm and

the Audit Committee, has assessed the effectiveness of the Group’s internal control system and considered that the Group’s internal

control system for the year ended 30 September 2007 has been implemented effectively.

A review of the effectiveness of the internal control system of the Group for the fi fteen months ended 31 December 2008 was

conducted by the Independent Professional Firm and the Audit Committee and subsequently reported to the Board in April 2009.

The Board considered that the Group’s internal control system has been implemented effectively.

DIRECTORS’ AND AUDITORS’ RESPONSIBILITIES FOR THE FINANCIAL STATEMENTS

The Directors acknowledge their responsibilities for the preparation of the fi nancial statements of the Group and ensure that the

fi nancial statements are in accordance with statutory requirements and applicable accounting standards. The Directors also ensure

the timely publication of the fi nancial statements of the Group.

The statement of the external auditors of the Company, CCIF CPA Limited, about their reporting responsibilities on the fi nancial

statements of the Group is set out in the Report of Auditors on page 43.

The Directors confi rm that, to the best of their knowledge, information and belief, having made all reasonable enquiries, they are not

aware of any material uncertainties relating to events or conditions that may cast signifi cant doubt upon the Company’s ability to

continue as a going concern.

AUDITORS’ REMUNERATION

For the fi fteen months ended 31 December 2008, the amounts paid to the external auditors of the Group in respect of the following

services provided to the Group are as follows:

31 December

2008

HK$’000

Audit services 1,267

Taxation advisory services 38

Other advisory services 1,647

2,952

32


COMMUNICATION WITH SHAREHOLDERS

The annual general meeting provides a useful forum for shareholders to exchange views with the Board. At the 2008 Annual General

Meeting, the Chairman as well as the chairmen of the Audit Committee and the Remuneration Committee were present to answer

the Shareholders’ questions.

Separate resolutions are proposed at general meetings on each substantially separate issues, including the election of individual

Directors.

Details of the poll voting procedures and the rights of shareholders to demand a poll were included in the circular to the Shareholders

regarding, inter alia, the notice of 2008 Annual General Meeting. The said circular also contained relevant details of the proposed

resolutions, including biographical details of each Director standing for re-election.

At the 2008 Annual General Meeting, all the resolutions were dealt with on a show of hands and were passed by the Shareholders.

The Company also maintains its own website at www.macausuccess.com, being updated in a timely manner, as a channel to

provide information on the Group to the Shareholders. In addition to sending hard copies to the Shareholders, the Company also

posts annual and interim reports as well as other publications on the Company’s website for the Shareholders and the potential

investors to access the soft copies of such publications.


Report of Directors

The directors (“Director(s)”) of Macau Success Limited (the “Company”) present their annual report together with the audited

fi nancial statements of the Company and its subsidiaries (collectively referred to as the “Group”) for the fi fteen months ended

31 December 2008 (the “Period”).

CHANGE OF FINANCIAL YEAR END DATE

Pursuant to a resolution passed by the board of Directors (the “Board”) on 31 October 2008, the fi nancial year end date of the

Company was changed from 30 September to 31 December, which enabled the Group as well as the associates of the Company

relating to the Group’s fl agship investment project, Ponte 16, to have a coterminous year end date. Accordingly, the consolidated

fi nancial statements of the Group presented for the Period cover the fi fteen months from 1 October 2007 to 31 December 2008.

PRINCIPAL ACTIVITIES

The Company is an investment holding company. Its subsidiaries are principally engaged in the leasing and management of the

55% owned cruise and tourist-related businesses. During the Period, the Company acquired the entire certain issued share capital

of Smart Class Enterprises Limited (“Smart Class”), being a company indirectly owns 80% equity interest in the travel agency

companies located in Canada and the United States of America (the “Jade Travel Group”). There was no signifi cant change in the

nature of the Group’s principal activities during the Period.

Particulars of the Company’s subsidiaries as at 31 December 2008 are set out in note 19 to the fi nancial statements.

RESULTS AND APPROPRIATIONS

The results of the Group for the Period are set out in the consolidated income statement on page 45.

No interim dividend was paid during the Period (2007: Nil). The Directors do not recommend any payment of a fi nal dividend for the

Period (2007: Nil).

SEGMENT INFORMATION

An analysis of the Group’s performance for the Period by business and geographical segments is set out in note 6 to the fi nancial

statements.

FIVE-YEAR FINANCIAL SUMMARY

A fi nancial summary of the Group for the past fi ve fi nancial years is set out on page 117.

SHARE CAPITAL

Details of the movements in the share capital of the Company during the Period are set out in note 34 to the fi nancial statements.

34

Report of Directors

RESERVES

Details of the movements in the reserves of the Group during the Period are set out in the consolidated statement of changes in equity

on page 49 of this annual report and other details of the reserves of the Group are set out in note 36 to the fi nancial statements.

PROPERTY, PLANT AND EQUIPMENT

Details of the movements in the property, plant and equipment of the Group during the Period are set out in note 16 to the fi nancial

statements.

DIRECTORS

The Directors who held offi ce during the Period and up to the date of this report were:

Executive Directors:

Mr. Yeung Hoi Sing, Sonny (Chairman)

Mr. Ma Ho Man, Hoffman (Deputy Chairman)

Mr. Lee Siu Cheung (resigned with effect from 1 June 2008)

Non-executive Director:

Mr. Choi Kin Pui, Russelle

Independent Non-executive Directors:


Mr. Yim Kai Pung


In accordance with bye-law no. 87 of the Bye-laws of the Company, Mr. Choi Kin Pui, Russelle and Mr. Yim Kai Pung shall retire

by rotation and, being eligible, will offer themselves for re-election at the forthcoming annual general meeting of the Company (the

“Annual General Meeting”).

DIRECTORS’ SERVICE CONTRACTS

None of the Directors proposed for re-election at the Annual General Meeting has a service contract with the Company which is not

determinable by the Company within one year without payment of compensation, other than statutory compensation.


Report of Directors

CONNECTED TRANSACTIONS AND DIRECTORS’ AND CONTROLLING SHAREHOLDERS’ INTERESTS IN CONTRACTS OF SIGNIFICANCE

(A) On 5 May 2008, the Company as purchaser entered into an agreement (“Agreement”) with Star Spangle Corporation (“Star

Spangle”) as vendor, being a company benefi cially wholly-owned by Mr. Yeung Hoi Sing, Sonny (“Mr. Yeung”), an executive

Director and a controlling shareholder of the Company. Pursuant to the Agreement, the Company acquired the entire issued

share capital of Smart Class, which indirectly owns 80% equity interest in the Jade Travel Group, from Star Spangle at an

agreed consideration of CAD2.9 million (equivalent to approximately HK$22.6 million) which was settled by the allotment

and issue of 19.5 million shares of the Company at an agreed issue price of HK$1.16 per share (the “Acquisition”). The

relevant consideration shares were allotted and issued to Silver Rich Macau Development Limited (which is wholly-owned by

a discretionary trust, the benefi ciaries of which are family members of Mr. Yeung) on 31 July 2008, being the completion date

of the Acquisition; and

(B) On 1 December 2008, the Company as borrower entered into an unsecured term loan facility agreement (the “Facility

Agreement”) with Mr. Yeung as lender. Pursuant to the Facility Agreement, Mr. Yeung provided a facility of up to

HK$200 million (the “Loan Facility”) to the Company. The rate of interest on the entire principal amount drawn and outstanding

under the Loan Facility was the prime rate quoted for Hong Kong dollars loans by The Hongkong and Shanghai Banking

Corporation Limited. The Loan Facility was available to the Company during the period from 1 December 2008 until whichever

is the earlier of (a) the date falling 1 month before the fi nal repayment date, ie on or before 30 June 2010; and (b) the date on

which the Loan Facility is reduced to zero.

Details of the connected transaction/contract of signifi cance as mentioned under paragraph (A) above are disclosed in compliance

with the requirements of Chapter 14A of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited

(the “Listing Rules”).

Save as disclosed above, there were no other connected transactions under Chapter 14A of the Listing Rules and no contracts of

signifi cance to which the Company or any of its subsidiaries was a party and in which any of the Director or controlling shareholder

or its subsidiaries had a material interest, whether directly or indirectly, subsisted at the end of the Period or at any time during the

Period.

MANAGEMENT CONTRACTS

No contracts concerning the management and administration of the whole or any substantial part of the business of the Company

were entered into or subsisted during the Period.

36

Report of Directors

DIRECTORS’ AND CHIEF EXECUTIVE’S INTERESTS IN SECURITIES

As at 31 December 2008, the Directors or chief executive of the Company and/or any of their respective associates had the following

interests and short positions in the shares, underlying shares or debentures of the Company or any of its associated corporations

(within the meaning of Part XV of the Securities and Futures Ordinance (Chapter 571) of the Laws of Hong Kong (the “SFO”)) as

recorded in the register required to be kept by the Company pursuant to Section 352 of the SFO, or as otherwise, notifi ed to the

Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to the Model Code for Securities

Transactions by Directors of Listed Issuers (the “Model Code”) contained in the Listing Rules:

Interest in the shares of the Company (“Share(s)”)

Approximate

Long position/ Number of percentage of

Name of Director Short position Nature of interest Shares held shareholding

%

Mr. Yeung (Note) Long position Corporate interest 1,010,953,432 41.45

Note: Mr. Yeung, an executive Director and the Chairman of the Company, is deemed to have corporate interest in 1,010,953,432 Shares by virtue

of the interest of the Shares held by Silver Rich Macau Development Limited, which is wholly-owned by a discretionary trust, the benefi ciaries

of which are family members of Mr. Yeung.

Save as disclosed above, as at 31 December 2008, none of the Directors or chief executive of the Company, or their respective

associates, had any interests or short positions in the shares, underlying shares or debentures of the Company or any of its associated

corporations (within the meaning of Part XV of the SFO) as recorded in the register required to be kept by the Company pursuant to

Section 352 of the SFO, or as otherwise, notifi ed to the Company and the Stock Exchange pursuant to the Model Code.

SHARE OPTION SCHEME AND DIRECTORS’ AND CHIEF EXECUTIVE’S RIGHTS TO ACQUIRE SHARES OR DEBENTURES

Details of the share option scheme are set out in note 35(b) to the fi nancial statements.

At no time during the Period was the Company or any of its subsidiaries, a party to any arrangements to enable the Directors to

acquire benefi ts by means of the acquisition of shares in, or debentures of, the Company or any other body corporate.


Report of Directors

SUBSTANTIAL SHAREHOLDERS’ INTERESTS IN SECURITIES

As at 31 December 2008, the following persons (other than a Director or chief executive of the Company) had, or were deemed or

taken to have, interests or short positions in the Shares and underlying Shares as recorded in the register required to be kept by the

Company pursuant to Section 336 of the SFO:

Interest in the Shares

ApproximateName of Long position/ Number of percentage ofsubstantial shareholder Short position Capacity Shares held shareholding %

Silver Rich Macau Long position Benefi cial owner 1,010,953,432 41.45

Development Limited

Trustcorp Limited Long position Trustee 1,010,953,432 41.45

(Note 1)

Newcorp Ltd. Long position Interest of 1,010,953,432 41.45

(Note 1) controlled corporation

Newcorp Holdings Ltd. Long position Interest of 1,010,953,432 41.45


Mr. David Henry Christopher Hill Long position Interest of 1,010,953,432 41.45


Mr. David William Roberts Long position Interest of 1,010,953,432 41.45


Mrs. Rebecca Ann Hill Long position Interest of spouse 1,010,953,432 41.45

(Note 2)

Ms. Liu Siu Lam, Marian Long position Interest of spouse 1,010,953,432 41.45

(Note 3)

Maruhan Corporation Long position Benefi cial owner 440,000,000 18.19

Notes:

As at 31 December 2008:

1. The entire issued share capital of Silver Rich Macau Development Limited was held by Trustcorp Limited, being a trustee of a discretionary trust,

the benefi ciaries of which are family members of Mr. Yeung. Trustcorp Limited was a wholly-owned subsidiary of Newcorp Ltd., which was in

turn wholly-owned by Newcorp Holdings Ltd., Newcorp Holdings Ltd. was owned as to 35% by each of Mr. David Henry Christopher Hill and

Mr. David William Roberts. Accordingly, each of Trustcorp Limited, Newcorp Ltd., Newcorp Holdings Ltd., Mr. David Henry Christopher Hill and

Mr. David William Roberts was deemed to be interested in 1,010,953,432 Shares held by Silver Rich Macau Development Limited.

2. Mrs. Rebecca Ann Hill, being the spouse of Mr. David Henry Christopher Hill, was deemed to be interested in 1,010,953,432 Shares in which

Mr. David Henry Christopher Hill had a deemed interest.

3. Ms. Liu Siu Lam, Marian, being the spouse of Mr. Yeung, was deemed to be interested in 1,010,953,432 Shares in which Mr. Yeung had a

deemed interest.

38

Report of Directors

Save as disclosed above, as at 31 December 2008, no other person (other than a Director or chief executive of the Company) had, or

was deemed or taken to have, an interest or short position in the Shares and underlying Shares which were recorded in the register

required to be kept by the Company under Section 336 of the SFO.

DISCLOSURE UNDER RULES 13.20 AND 13.22 OF THE LISTING RULES

Based on the disclosure obligations under Rules 13.20 and 13.22 of the Listing Rules, the fi nancial assistance, which was made

by the Group by way of the shareholder’s loan provided by World Fortune Limited (“World Fortune”), an indirect subsidiary of the

Company, and a corporate guarantee given by the Company in respect of the payment obligation of Pier 16 – Property Development

Limited (“Pier 16 – Property Development”, a 49%-owned associate of World Fortune) (the “Financial Assistance”) under a loan facility

granted to Pier 16 – Property Development, continued to exist as at 31 December 2008. Pier 16 – Property Development is principally

engaged in the investment, development and, through its subsidiaries, operation of Ponte 16, a world-class integrated casino-

entertainment resort located in Macau. The Financial Assistance is mainly used for the development and operation of Ponte 16.

The amounts of the Financial Assistance as at 31 December 2008 were set out below:

Aggregate

Financial

Name of associate Shareholder’s loan Corporate guarantee Assistance

HK$’million HK$’million HK$’million

Pier 16 – Property Development 900.5 860.0 1,760.5

The shareholder’s loan provided by World Fortune is unsecured, interest-free and has no fi xed term of repayment.

Further details are set out in notes 20 and 38 to the fi nancial statements.

Set out below is a combined balance sheet of Pier 16 – Property Development and the Group’s attributable interests in this associate

according to its latest audited consolidated fi nancial statements:

Group’s

Combined attributable

balance sheet interests

HK$’000 HK$’000

Non-current assets 2,538,331 1,243,782

Current assets 455,049 222,974

Current liabilities 411,320 201,547

Non-current liabilities 2,929,024 1,435,221


Report of Directors

CONVERTIBLE SECURITIES, OPTIONS, WARRANTS OR SIMILAR RIGHTS

The Company had no outstanding convertible securities, options, warrants or other similar rights as at 31 December 2008.

PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES

During the Period, there was no purchase, sale or redemption by the Company, or any of its subsidiaries, of the listed securities of

the Company.

MAJOR SUPPLIERS AND CUSTOMERS

During the Period, the fi ve largest customers of the continuing operations of the Group accounted for 36.6% of total turnover of the

continuing operations of the Group of which the largest customer accounted for approximately 18.8% and the fi ve largest suppliers

of the continuing operations of the Group accounted for 97.2% of total purchases of the continuing operations of the Group, of which

the largest supplier accounted for approximately 85.4%.

None of the Directors or any of their associates or any shareholders (which, to the best knowledge of the Directors, owns more than

5% of the Company’s issued share capital) had any benefi cial interest in the above fi ve largest customers or fi ve largest suppliers.

CHARITABLE CONTRIBUTIONS

During the Period, the Group made charitable and other donations totalling approximately HK$546,000 (2007: Nil).

POST BALANCE SHEET EVENTS

On 14 April 2009, the Company as borrower and Mr. Yeung as lender also entered into an agreement to increase the Loan Facility

up to HK$290 million. In addition, Mr. Yeung undertakes not to demand early repayment of the loan and all other sums owing to Mr.

Yeung before 30 June 2010.

In the opinion of the Directors, the borrowing of the Loan Facility was for the benefi t of the Company and on normal commercial

terms where no security over the assets of the Company was granted.

PRE-EMPTIVE RIGHTS

There is no provision for pre-emptive rights under the Bye-laws of the Company which would oblige the Company to offer new

Shares on a pro-rata basis to its existing shareholders.

SUFFICIENCY OF PUBLIC FLOAT

As at the date of this report, the Company has maintained a suffi cient public fl oat as prescribed under the Listing Rules, based on

the information that is publicly available to the Company and within the knowledge of the Directors.

40

Report of Directors

EMOLUMENT POLICY

The remuneration committee of the Board (the “Remuneration Committee”) is responsible for determining specifi c remuneration

packages of all executive Directors and senior management of the Company (the “Senior Management”). Besides, the Remuneration

Committee makes recommendation to the Board for its determination on the remuneration of the non-executive Director and the

independent non-executive Directors. Factors such as salaries paid by comparable companies, qualifi cations, experience, time

commitment and responsibilities of the Directors and the Senior Management are considered by the Remuneration Committee for

determining/making proposals on remuneration of the relevant Directors and the Senior Management.

The remuneration packages of employees of the Group (other than the executive Directors and the Senior Management) are

determined and reviewed periodically on the basis of their respective qualifi cations, experience, responsibilities and performances. In

addition to salaries, the Company offers staff benefi ts which include medical insurance and retirement benefi ts under the Mandatory

Provident Fund Scheme. The Group also operates a share option scheme pursuant to which share options might be granted as a

long-term incentive to its directors and employees.

CORPORATE GOVERNANCE

The Company has published its Corporate Governance Report, details of which are set out on pages 26 to 32 of this annual

report.

AUDITORS

The consolidated fi nancial statements have been audited by CCIF CPA Limited who shall retire at the Annual General Meeting and,

being eligible, will offer themselves for re-appointment.

On behalf of the Board

Yeung Hoi Sing, Sonny

Chairman

Hong Kong, 16 April 2009


Biographical Details of Directors and Senior Management

EXECUTIVE DIRECTORS

Mr. Yeung Hoi Sing, Sonny, aged 54, joined the Group in 2003. He is an executive director and the Chairman of the Company as

well as a director of the subsidiaries of the Company. He is also the chairman of the remuneration committee (the “Remuneration

Committee”) and the executive committee (the “Executive Committee”) of the Company. Mr. Yeung is responsible for the overall

corporate planning and business development of the Group. He has been a member of the National Committee of the Chinese

People’s Political Consultative Conference, the People’s Republic of China (the “PRC”) since 1993 and has over 25 years of

experience in fi nance industry in Hong Kong. Prior to joining the Group, Mr. Yeung held managerial roles in several fi nancial service

sectors such as leveraged foreign exchange trading, and securities and futures brokerage. He is presently the sole benefi cial owner

of Success Securities Limited, which is a licensed corporation under the Securities and Futures Ordinance (the “SFO”) as well as a

participant of The Stock Exchange of Hong Kong Limited (the “Stock Exchange”), principally engaged in the provision of securities

brokerage services. Mr. Yeung has certain private investments in property development businesses in Hong Kong and Canada. He

is also a director of Silver Rich Macau Development Limited, being a substantial shareholder of the Company. Mr. Yeung is an uncle

of Mr. Ma Ho Man, Hoffman, an executive director and the Deputy Chairman of the Company.

Mr. Ma Ho Man, Hoffman, aged 35, joined the Group in 2005. He is an executive director and the Deputy Chairman of the Company

as well as a director of the subsidiaries of the Company. Mr. Ma is also a member of the Executive Committee. He is responsible

for managing the Group’s business and overall operations. Mr. Ma joined Success Securities Limited (“SSL”) in 2000 and has been

a director of SSL since November 2008. He has been responsible for overseeing the marketing affairs of SSL, which is a licensed

corporation under the SFO as well as a participant of the Stock Exchange and is benefi cially wholly-owned by Mr. Yeung Hoi Sing,

Sonny (“Mr. Yeung”), being an executive director and the Chairman of the Company. Mr. Ma has over 12 years of experience in the

fi nancial industry and years of managerial experience. He is a nephew of Mr. Yeung.

NON-EXECUTIVE DIRECTOR

Mr. Choi Kin Pui, Russelle, aged 54, joined the Group in 2003. He is a non-executive director of the Company and a member

of the audit committee of the Company (the “Audit Committee”) and the Remuneration Committee. Mr. Choi graduated from

St. Pius X High School in 1976. He has over 15 years of management experience in the telecommunication industry in Hong Kong

and the United States (the “US”). Mr. Choi established Elephant Talk Limited in 1994, a wholly-owned subsidiary of an American

corporation, Elephant Talk Communications Inc. (“ETCI”), whose securities are quoted on the Over-The-Counter Bulletin Board in

the US and engages in the provision of telecommunications services in Hong Kong and the US. Mr. Choi was a director of ETCI from

2002 to 2008 as well as the president and the chief executive offi cer of ETCI from 2002 to 2006 and was responsible for the planning

of the overall strategy of ETCI. He also served as the chairman of ET Network Services Limited, a company incorporated in Hong

Kong with limited liability and engages in the provision of internet access and outsourcing services in the PRC and Hong Kong. Mr.

Choi is presently an executive director of Mintel Inc., a licensed carrier in the PRC.

42

Biographical Details of Directors and Senior Management

INDEPENDENT NON-EXECUTIVE DIRECTORS

Mr. Luk Ka Yee, Patrick, aged 47, joined the Group in 2003. He is an independent non-executive director of the Company and a

member of the Audit Committee and the Remuneration Committee. Mr. Luk obtained a Law Degree in England in 1986. Throughout

his tenure of career, Mr. Luk has been appointed to serve in various senior management positions which involved corporate/legal

and property development as well as property management aspects. He is presently the consultant to Pacifi c Rich Management &

Consultants Limited, a company providing property and facilities management in Hong Kong.

Mr. Yim Kai Pung, aged 44, joined the Group in 2004. He is an independent non-executive director of the Company, the chairman

of the Audit Committee and a member of the Remuneration Committee. Mr. Yim holds a Bachelor degree of Accountancy

with honours from City University of Hong Kong in 1993 and is an associate member of Hong Kong Institute of Certifi ed Public

Accountants and a fellow member of The Association of Chartered Certifi ed Accountants of the United Kingdom. He has over

18 years of experience in auditing, taxation and provision of fi nance consultancy services for companies in Hong Kong and the

PRC. Mr. Yim is presently a sole proprietor of David Yim & Co., Certifi ed Public Accountants. He is currently an executive director

of Sanyuan Group Limited, a company listed on the Main Board of the Stock Exchange, and was an independent non-executive

director of Magician Industries (Holdings) Limited, a company listed on the Main Board of the Stock Exchange, and an executive

director of Tiger Tech Holdings Limited (now known as Heng Xin China Holdings Limited), a company listed on the Growth Enterprise

Market of the Stock Exchange.

Ms. Yeung Mo Sheung, Ann, aged 44, joined the Group in 2004. She is an independent non-executive director of the Company

and a member of the Audit Committee and the Remuneration Committee. Ms. Yeung holds a Bachelor degree of Retail Marketing

with honours in the United Kingdom and a Diploma in Marketing from The Chartered Institute of Marketing. She pursued her further

study on legal course and has been awarded a Diploma in Legal Practice in the United Kingdom in 1998 and is presently a partner of

Messrs. Fung & Fung, Solicitors, a legal fi rm in Hong Kong. Ms. Yeung was an independent non-executive director of Fast Systems

Technology (Holdings) Limited, a company listed on the Growth Enterprise Market of the Stock Exchange, and a non-executive

director of Zhong Hua International Holdings Limited, a company listed on the Main Board of the Stock Exchange.

COMPANY SECRETARY

Ms. Chiu Nam Ying, Agnes, aged 35, joined the Group in 2003. She is the company secretary of the Company and is responsible

for overseeing all legal matters of the Group. Ms. Chiu is a qualifi ed solicitor and an associate member of The Hong Kong Institute of

Chartered Secretaries and The Institute of Chartered Secretaries and Administrators. She holds a Master degree of Laws from The

University of Sheffi eld, United Kingdom in 1997. Before joining the Group, Ms. Chiu was a practicing solicitor in a local law fi rm and

possessed solid experience in banking and fi nance as well as property related matters.

FINANCIAL CONTROLLER

Mr. Wong Chi Keung, Alvin, aged 46, joined the Group in 2008. He is the fi nancial controller of the Group as well as the qualifi ed

accountant of the Company, and is responsible for fi nancial and accounting matters of the Group. Mr. Wong is a fellow member of

the Hong Kong Institute of Certifi ed Public Accountants and The Association of Chartered Certifi ed Accountants and an associate

member of The Chartered Institute of Management Accountants. He is currently an independent non-executive director as well as

the chairman of both the audit committee and the remuneration committee of ITC Properties Group Limited, a company listed on

the Main Board of the Stock Exchange. He has over 21 years of experience in accounting and corporate fi nance gained in property

development, construction and manufacturing companies.


Report of Auditors

INDEPENDENT AUDITOR’S REPORT

TO THE SHAREHOLDERS OF MACAU SUCCESS LIMITED

(INCORPORATED IN BERMUDA WITH LIMITED LIABILITY)

We have audited the consolidated fi nancial statements of Macau Success Limited (the “Company”) set out on pages 45 to 116,

which comprise the consolidated and Company balance sheets as at 31 December 2008, and the consolidated income statement,

the consolidated statement of changes in equity and the consolidated cash fl ow statement for the period from 1 October 2007 to

31 December 2008, and a summary of signifi cant accounting policies and other explanatory notes.

DIRECTORS’ RESPONSIBILITY FOR THE FINANCIAL STATEMENTS

The directors of the Company are responsible for the preparation and the true and fair presentation of these fi nancial statements

in accordance with Hong Kong Financial Reporting Standards issued by the Hong Kong Institute of Certifi ed Public Accountants

and the disclosure requirements of the Hong Kong Companies Ordinance. This responsibility includes designing, implementing and

maintaining internal control relevant to the preparation and the true and fair presentation of fi nancial statements that are free from

material misstatement, whether due to fraud or error; selecting and applying appropriate accounting policies; and making accounting

estimates that are reasonable in the circumstances.

AUDITOR’S RESPONSIBILITY

Our responsibility is to express an opinion on these fi nancial statements based on our audit. This report is made solely to you, as

a body, in accordance with Section 90 of the Companies Act 1981 of Bermuda, and for no other purpose. We do not assume

responsibility towards or accept liability to any other person for the contents of this report.

We conducted our audit in accordance with Hong Kong Standards on Auditing issued by the Hong Kong Institute of Certifi ed Public

Accountants. Those standards require that we comply with ethical requirements and plan and perform the audit to obtain reasonable

assurance as to whether the fi nancial statements are free from material misstatement.

44

Report of Auditors

An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the fi nancial statements.

The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the

fi nancial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant

to the entity’s preparation and true and fair presentation of the fi nancial statements in order to design audit procedures that are

appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control.

An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates

made by the directors, as well as evaluating the overall presentation of the fi nancial statements.

We believe that the audit evidence we have obtained is suffi cient and appropriate to provide a basis for our audit opinion.

OPINION

In our opinion, the consolidated fi nancial statements give a true and fair view of the state of affairs of the Company and of the Group

as at 31 December 2008 and of the Group’s loss and cash fl ows for the period from 1 October 2007 to 31 December 2008 in

accordance with Hong Kong Financial Reporting Standards and have been properly prepared in accordance with the disclosure

requirements of the Hong Kong Companies Ordinance.

CCIF CPA Limited

Certifi ed Public Accountants

Hong Kong, 16 April 2009

Alvin Yeung

Practising Certifi cate Number P05206


Consolidated Income StatementFor the period from 1 October 2007 to 31 December 2008

Period from

1.10.2007 to Year ended

31.12.2008 30.9.2007

Notes HK$’000 HK$’000

Turnover 6, 7 627,254 103,754

Cost of sales (492,697 ) (8,069 )

Gross profi t 134,557 95,685

Other revenue 8 34,817 15,972

Other net income 8 298 14,721

Administrative expenses (194,316 ) (92,309 )

Other operating expenses (42,948 ) –

(Loss)/profi t from operations (67,592 ) 34,069

Finance costs 9(a) (335 ) (1,675 )

Share of results of associates (170,292 ) (15,450 )

(Loss)/profi t before taxation 9 (238,219 ) 16,944

Income tax 10 (859 ) (672 )

(Loss)/profi t for the period/year (239,078 ) 16,272

Attributable to:

Equity shareholders of the Company (238,304 ) 2,314

Minority interests (774 ) 13,958


Dividends payable to equity shareholders of

the Company attributable to the period/year 14 – –

(Loss)/earnings per share 15

– Basic (9.87) HK cents 0.11 HK cents

– Diluted (9.87) HK cents 0.11 HK cents

The notes on pages 52 to 116 form part of these fi nancial statements.

46

Consolidated Balance SheetAs at 31 December 2008

At At

31.12.2008 30.9.2007


NON-CURRENT ASSETS

Property, plant and equipment 16 85,711 87,945

Goodwill 17 7,723 1,313

Intangible assets 18 34,608 –

Interest in associates 20 1,119,892 886,930

Deposit for acquisition of properties 21 2,290 –

Deposit for acquisition of a company 22 60,384 –

Deferred tax assets 32(b) 1,190 –

1,311,798 976,188

CURRENT ASSETS

Inventories 23 1,160 1,323

Trade and other receivables 24 31,183 18,398

Tax recoverable 1,369 –

Pledged bank deposits 25 6,762 751

Cash and cash equivalents 25 66,675 200,719

107,149 221,191

CURRENT LIABILITIES

Trade and other payables 26 23,457 106,422

Deferred income 27 807 –

Profi t guarantee liabilities 28 12,892 –

Financial guarantee contract 33 12,600 12,600

Tax payable 32(a) 968 961

50,724 119,983

NET CURRENT ASSETS 56,425 101,208

TOTAL ASSETS LESS CURRENT LIABILITIES 1,368,223 1,077,396

NON-CURRENT LIABILITIES

Deferred income 27 294 –

Profi t guarantee liabilities 28 32,608 –

Loans payables 29 167,957 –

Long-term payables 30 187,048 –

Due to a related company 31 17,574 –

Deferred tax liabilities 32(b) 83 83


437,064 50,483

NET ASSETS 931,159 1,026,913


Consolidated Balance SheetAs at 31 December 2008


At At

31.12.2008 30.9.2007


CAPITAL AND RESERVES

Share capital 34 24,390 21,995

Reserves 36 860,448 954,935

TOTAL EQUITY ATTRIBUTABLE TO

EQUITY SHAREHOLDERS OF THE COMPANY 884,838 976,930

MINORITY INTERESTS 36 46,321 49,983

TOTAL EQUITY 931,159 1,026,913

Approved and authorised for issue by the board of directors on 16 April 2009

On behalf of the board

Yeung Hoi Sing, Sonny Ma Ho Man, Hoffman

Director Director

48

Balance SheetAs at 31 December 2008

At At

31.12.2008 30.9.2007


NON-CURRENT ASSETS

Investments in subsidiaries 19 1,072,805 687,244

CURRENT ASSETS

Deposits, prepayments and other receivables 24 373 209

Pledged bank deposits 25 5,996 –

Cash and cash equivalents 25 7,309 181,045

13,678 181,254

CURRENT LIABILITIES

Other payables and accruals 26 65,937 51,659


78,537 64,259

NET CURRENT (LIABILITIES)/ASSETS (64,859 ) 116,995

TOTAL ASSETS LESS CURRENT LIABILITIES 1,007,946 804,239

NON-CURRENT LIABILITIES


NET ASSETS 976,446 753,839

CAPITAL AND RESERVES

Share capital 34 24,390 21,995

Reserves 36 952,056 731,844

TOTAL EQUITY 976,446 753,839

Approved and authorised for issue by the board of directors on 16 April 2009.

On behalf of the board

Yeung Hoi Sing, Sonny Ma Ho Man, Hoffman

Director Director



Consolidated Statement of Changes in EquityFor the period from 1 October 2007 to 31 December 2008

Attributable to equity shareholders of the Company

Retained

Capital Property profi ts/

Share Share Distributable redemption revaluation Exchange (accumulated) Minority Total

capital premium reserve reserve reserve reserve losses) Total interests equity

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 October 2006 21,395 612,516 52,333 976 187,065 – 52,331 926,616 40,304 966,920

Allotment of consideration

shares (note 34(a)) 600 47,400 – – – – – 48,000 – 48,000

Profi t for the year – – – – – – 2,314 2,314 13,958 16,272

Interim dividend

declared during the year – – – – – – – – (4,279 ) (4,279 )

At 30 September 2007 21,995 659,916 52,333 976 187,065 – 54,645 976,930 49,983 1,026,913

At 1 October 2007 21,995 659,916 52,333 976 187,065 – 54,645 976,930 49,983 1,026,913

Allotment of subscription shares (note 34(b)) 2,200 231,440 – – – – – 233,640 – 233,640

Allotment of consideration shares (note 34(c)) 195 21,645 – – – – – 21,840 – 21,840

Share issuance costs – (4,216 ) – – – – – (4,216 ) – (4,216 )

Exchange differences

on translation of fi nancial

statements of subsidiaries – – – – – (4,235 ) – (4,235 ) (1,001) (5,236 )

Share of associates’

net loss recognized

directly in equity – – – – (100,817 ) – – (100,817 ) – (100,817 )

Acquisition of subsidiaries – – – – – – – – 4,863 4,863

Loss for the period – – – – – – (238,304 ) (238,304 ) (774 ) (239,078 )

Dividend paid to

minority shareholders – – – – – – – – (6,750 ) (6,750 )

At 31 December 2008 24,390 908,785 52,333 976 86,248 (4,235 ) (183,659 ) 884,838 46,321 931,159


50

Consolidated Cash Flow StatementFor the period from 1 October 2007 to 31 December 2008

Period from


31.12.2008 30.9.2007


OPERATING ACTIVITIES

(Loss)/profi t before taxation (238,219 ) 16,944

Adjustments for:

Interest income (4,851 ) (10,197 )

Finance costs 335 1,675

Depreciation 13,459 8,710

Amortisation of intangible assets 215 –

Amortisation of fi nancial guarantee contract (18,900 ) –

Share of results of associates 170,292 15,450

Impairment loss on

– goodwill 609 –

– client list 676 –

– other receivables 22,763 –

– interest in associates 18,900 –

Write back of trade payables (3,858 ) –

Dividend from available-for-sale investment – (1,133 )

Gain on disposal of securities – (4,391 )

Exchange alignment (1,482 ) –

(Gain)/loss on disposal of property, plant and equipment (298 ) 175

Gain on disposal of available-for-sale investment – (10,330 )

Gain on write off of a subsidiary under voluntary liquidation (13 ) –

OPERATING (LOSS)/PROFIT BEFORE CHANGES IN WORKING CAPITAL (40,372 ) 16,903

Decrease/(increase) in inventories 163 (145 )

Increase in trade and other receivables (10,445 ) (4,889 )

(Decrease)/increase in trade and other payables (108,680 ) 100,375

Increase in deferred income 540 –

Increase in due to a related company 292 –

CASH (USED IN)/GENERATED FROM OPERATIONS (158,502 ) 112,244

Income tax paid

– Hong Kong profi ts tax paid (1,694 ) –

– Overseas tax refund 38 –

NET CASH (USED IN)/GENERATED FROM OPERATING ACTIVITIES (160,158 ) 112,244


Consolidated Cash Flow StatementFor the period from 1 October 2007 to 31 December 2008

Period from


31.12.2008 30.9.2007


INVESTING ACTIVITIES

Payment for purchase of property, plant and equipment (6,256 ) (5,337 )

Proceeds from disposal of property, plant and equipment 1,272 43

Payment of deposit for acquisition of properties (2,290 ) –

Payment of deposit for acquisition of a company (60,384 ) –

Payment for subscription of convertible bonds – (11,875 )

Net proceeds from disposal of securities from

exercise of convertible bonds – 16,266

Further acquisition of 12.25% interest in associates – (153,231 )

Net cash infl ow from acquisition of subsidiaries 41(b) 5,063 –

Increase in amounts due from associates (522,971 ) (262,134 )

Net proceeds from disposal of available-for-sale investment – 35,569

Increase in pledged bank deposits (6,011 ) (22 )

Interest income 4,851 10,197

Dividend from available-for-sale investment – 1,133

NET CASH USED IN FROM INVESTING ACTIVITIES (586,726 ) (369,391 )

FINANCING ACTIVITIES

Net proceeds from issue of shares 229,424 –

Proceeds from loans payables 29 159,238 –

Proceeds from long-term payables 30 187,048 –

Proceeds from profi t guarantee liabilities 28 45,500 –

Proceeds of loan from a fi nancial institution – 130,000

Repayment of loan from a fi nancial institution – (130,000 )

Finance costs (335 ) (1,675 )

Repayments of loans from minority shareholders – (5,056 )

Dividend paid to minority interests (6,750 ) (4,279 )

NET CASH GENERATED/(USED IN)FROM FINANCING ACTIVITIES 614,125 (11,010 )

NET DECREASE IN CASH AND CASH EQUIVALENTS (132,759 ) (268,157 )

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD/YEAR 200,719 468,876

EFFECT OF FOREIGN EXCHANGE RATE CHANGES (1,285 ) –

CASH AND CASH EQUIVALENTS AT END OF PERIOD/YEAR 66,675 200,719

ANALYSIS OF BALANCES OF CASH AND CASH EQUIVALENTS

Cash and bank balances 25 66,675 200,719

Non-cash transaction

The principal non-cash transaction is the issue of consideration shares for the transaction disclosed in note 34(c).


52

Notes to the Financial StatementsFor the period from 1 October 2007 to 31 December 2008

1. ORGANISATION AND PRINCIPAL ACTIVITIES

The Company was incorporated as an exempted company with limited liability in Bermuda on 27 May 2004 under the

Companies Act (1981) of Bermuda and is listed on The Stock Exchange of Hong Kong Limited.

The principal activity of the Company is investment holding. The principal activities of its subsidiaries are set out in note 19 to

the fi nancial statements.

2. SIGNIFICANT ACCOUNTING POLICIES

a) Statement of Compliance

These fi nancial statements have been prepared in accordance with all applicable Hong Kong Financial Reporting

Standards (“HKFRSs”), which collective term includes all applicable individual Hong Kong Financial Reporting Standards,

Hong Kong Accounting Standards (“HKASs”) and Interpretations issued by the Hong Kong Institute of Certifi ed Public

Accountants (“HKICPA”), accounting principles generally accepted in Hong Kong and the disclosure requirements of

the Hong Kong Companies Ordinance. These fi nancial statements also comply with the applicable disclosure provisions

of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited. A summary of the

signifi cant accounting policies adopted by the Group is set out below.

The HKICPA has issued certain new and revised HKFRSs, amendments and interpretations which are or have become

effective. It has also issued certain new and revised HKFRSs which are fi rst effective or available for early adoption for

the current accounting period of the Group and the Company. Note 3 provides information on initial application of these

developments to the extent that they are relevant to the Group for the current and prior accounting periods refl ected in

these fi nancial statements.

b) Basis of Preparation of the Financial Statements

(i) Going Concern

The consolidated fi nancial statements for the period ended 31 December 2008 comprise the Company, its

subsidiaries and the Group’s interest in associates.

The Group incurred a loss attributable to equity shareholders of the Company of approximately HK$238,304,000

and net decrease in cash and cash equivalents of approximately HK$132,759,000 for the period ended 31

December 2008.

In preparing these fi nancial statements, the directors of the Company have given careful consideration to the

impact of the current and anticipated future liquidity of the Group and the ability of the Group to attain profi table

and positive cash fl ow operations in the immediate and longer term.



2. SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

b) Basis of Preparation of the Financial Statements (continued)

(i) Going Concern (continued)

In order to strengthen the capital base of the Group and to improve the Group’s liquidity and cash fl ows in the

immediate foreseeable future, and to sustain the Group as a going concern, the Company has entered into a term

loan facility agreement with Mr. Yeung Hoi Sing, Sonny (“Mr. Yeung”), a director and the controlling shareholder

of the Company, on 1 December 2008. Pursuant to the facility agreement, Mr. Yeung agreed to provide a credit

facility of up to HK$200 million to the Company. The credit facility is available to the Company during the period

from 1 December 2008 until the earlier of (i) the date falling one month before the fi nal repayment date, i.e. on

or before 30 June 2010; and (ii) the date on which the credit facility is reduced to zero. On 14 April 2009, the

Company and Mr. Yeung has entered into an agreement to increase the credit facility up to HK$290 million.

In addition, Mr. Yeung undertakes not to demand an early repayment of the loan and all other sums owing to

Mr. Yeung before 30 June 2010. After the balance sheet date and up to the date of approval of these fi nancial

statements, the Company had utilized the credit facility amounted to HK$3.5 million.

In the opinion of the directors, taking into account of the credit facility and fi nancial undertaking from Mr. Yeung,

the Group will have suffi cient working capital for its current requirements. Accordingly, the directors consider that

it is appropriate to prepare the fi nancial statements on a going concern basis.

Should the Group be unable to continue as a going concern, adjustments would have to be made to restate

the values of assets to their recoverable amounts, to provide for any further liabilities which might arise and

to classify non-current assets and liabilities as current assets and liabilities, respectively. The effects of these

potential adjustments have not been refl ected in the fi nancial statements.

(ii) Change of fi nancial year end date

The consolidated fi nancial statements for the current period cover the 15-month period ended 31 December

2008. The corresponding comparative amounts shown for the consolidated income statement, consolidated

statements of changes in equity, consolidated cash fl ow statement and related notes cover a 12-month year

ended 30 September 2007 and therefore may not be comparable with amounts shown for the current period.

The period covered by the 2008 consolidated fi nancial statements was greater than twelve months because the

directors of the Company determined to bring the balance sheet date in line with that of the subsidiaries and

associates and therefore facilitating the preparation of the Group’s consolidated fi nancial statements.

54



b) Basis of Preparation of the Financial Statements (continued)

(iii) Basis of measurement

The measurement basis used in the preparation of the fi nancial statements is the historical cost basis except for

derivative fi nancial instruments which are stated at their fair value explained in the accounting policies set out

below.

The preparation of fi nancial statements in conformity with HKFRSs requires management to make judgements,

estimates and assumptions that affect the application of policies and reported amounts of assets, liabilities,

income and expenses. The estimates and associated assumptions are based on historical experience and various

other factors believed to be reasonable under the circumstances, the results of which form the basis of making

the judgements about carrying values of assets and liabilities not readily apparent from other sources. Actual

results may differ from these estimates.

The estimates and underlying assumptions are reviewed on an ongoing basis. Revisions to accounting estimates

are recognised in the period in which the estimate is revised if the revision affects only that period, or in the period

of the revision and future periods if the revision affects both current and future periods.

Judgements made by management in the application of HKFRSs that have signifi cant effect on the fi nancial

statements and estimates with a signifi cant risk of material adjustment in the next year are discussed in note 5.

c) Subsidiaries and Minority Interests

Subsidiaries are entities controlled by the Group. Control exists when the Group has the power to govern the fi nancial

and operating policies of an entity so as to obtain benefi ts from its activities. In assessing control, potential voting rights

that presently are exercisable are taken into account.

An investment in a subsidiary is consolidated into the consolidated fi nancial statements from the date that control

commences until the date that control ceases.

Intra-group balances and transactions and any unrealised profi ts arising from intra group transactions are eliminated

in full in preparing the consolidated fi nancial statements. Unrealised losses resulting from intra-group transactions are

eliminated in the same way as unrealised gains but only to the extent there is no evidence of impairment.

Minority interests represent the portion of the net assets of subsidiaries attributable to interests that are not owned by the

Company, whether directly or indirectly through subsidiaries, minority interests are presented in the consolidated balance

sheet and statement of changes in equity within equity, separately from equity attributable to the equity shareholders

of the Company. Minority interests in the results of the Group are presented on the face of the consolidated income

statement as an allocation of the total profi t or loss for the year between minority interests and the equity shareholders

of the Company.




c) Subsidiaries and Minority Interests (continued)

Where losses applicable to the minority exceed the minority’s interest in the equity of a subsidiary, the excess, and any

further losses applicable to the minority, are charged against the Group’s interest except to the extent that the minority

has a binding obligation to, and is able to, make additional investment to cover the losses. If the subsidiary subsequently

reports profi ts, the Group’s interest is allocated all such profi ts under the minority’s share of losses previously absorbed

by the Group has been recovered.

Loans from holders of minority interest and other contractual obligations towards these holders are presented as fi nancial

liabilities in the consolidated balance sheet in accordance with note 2(n).

In the Company’s balance sheet, an investment in a subsidiary is stated at cost less impairment losses (see note 2(k)).

d) Associates

An associate is an entity in which the Group has signifi cant infl uence, but not control over its management, including

participation in the fi nancial and operating policy decisions.

An investment in an associate is accounted for in the consolidated fi nancial statements under the equity method and is

initially recorded at cost and adjusted thereafter for the post acquisition change in the Group’s share of the associate’s

net assets, unless it is classifi ed as held for sale (or included in a disposal group that is classifi ed as held for sale). The

consolidated income statement includes the Group’s share of the post-acquisition, post-tax results of the associates

for the year, including any impairment loss on goodwill relating to the investment in associates for the year (see notes

2(f) and (k)).

When the Group’s share of losses exceeds its interest in the associate, the Group’s interest is reduced to nil and

recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive

obligations or made payments on behalf of the associate. For this purpose, the Group’s interest in the associate is

the carrying amount of the investment under the equity method together with the Group’ long-term interests that in

substance form part of the Group’s net investment in the associate.

Unrealised profi ts and losses resulting from transactions between the Group and its associates are eliminated to the

extent of the Group’s interest in the associate, except where unrealized losses provide evidence of an impairment of the

asset transferred, in which case they are recognised immediately in profi t or loss.

56



e) Business combinations

The acquisition of businesses is accounted for using the purchase method. The cost of the acquisition is measured

at the aggregate of the fair values, at the date of exchange, of assets given, liabilities incurred or assumed, and equity

instruments issued by the Group in exchange for control of the acquiree, plus any costs directly attributable to the

business combination. The acquiree’s identifi able assets, liabilities and contingent liabilities that meet the conditions for

recognition under HKFRS 3 Business Combinations are recognised at their fair values at the acquisition date, except

for non-current assets (or disposal groups) that are classifi ed as held for sale in accordance with HKFRS 5 Non-current

Assets Held for Sale and Discontinued Operations, which are recognised and measured at fair value less costs to sell.

Goodwill arising on acquisition is recognised as an asset and initially measured at cost, being the excess of the cost of

the business combination over the Group’s interest in the net fair value of the identifi able assets, liabilities and contingent

liabilities recognised. If, after reassessment, the Group’s interest in the net fair value of the acquiree’s identifi able assets,

liabilities and contingent liabilities exceeds the cost of the business combination, the excess is recognised immediately

in profi t or loss.

The interest of minority shareholders in the acquiree is initially measured at the minority’s proportion of the net fair value

of the assets, liabilities and contingent liabilities recognised.

f) Goodwill

Goodwill represents the excess of the cost of a business combination or an investment in an associate over the Group’s

interest in the net fair value of the acquiree’s identifi able assets, liabilities and contingent liabilities.

Goodwill is stated at cost less accumulated impairment losses. Goodwill is allocated to cash-generating units and is

tested annually for impairment (see note 2(k)). In respect of associates, the carrying amount of goodwill is included in the

carrying amount of the interest in the associates.

Any excess of the Group’s interest in the net fair value of the acquiree’s identifi able assets, liabilities and contingent

liabilities over the cost of a business combination or an investment in an associate is recognised immediately in profi t

or loss.

On disposal of a cash-generating unit or an associate, any attributable amount of purchased goodwill is included in the

calculation of the profi t or loss on disposal.

g) Financial instruments

Financial assets and fi nancial liabilities are recognised on the balance sheet when a group entity becomes a party to

the contractual provisions of the instrument. Financial assets and fi nancial liabilities are initially measured at fair value.

Transaction costs that are directly attributable to the acquisition or issue of fi nancial assets and fi nancial liabilities (other

than fi nancial assets and fi nancial liabilities at fair value through profi t or loss) are added to or deducted from the

fair value of the fi nancial assets or fi nancial liabilities, as appropriate, on initial recognition. Transaction costs directly

attributable to the acquisition of fi nancial assets or fi nancial liabilities at fair value through profi t or loss are recognised

immediately in profi t or loss.




g) Financial instruments (continued)

Financial assets

The Group’s fi nancial assets are classifi ed into one of the four categories, including fi nancial assets at fair value through

profi t or loss (“FVTPL”), loans and receivables, held-to-maturity investments and available-for-sale fi nancial assets. All

regular way purchases or sales of fi nancial assets are recognised and derecognised on a trade date basis. Regular

way purchases or sales are purchases or sales of fi nancial assets that require delivery of assets within the time frame

established by regulation or convention in the marketplace.

Effective interest method

The effective interest method is a method of calculating the amortised cost of a fi nancial asset and of allocating interest

income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash

receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction

costs and other premiums or discounts) through the expected life of the fi nancial asset, or, where appropriate, a shorter

period.

Income is recognised on an effective interest basis for debt instruments other than those fi nancial assets designated as

at FVTPL, of which interest income is included in net gains or losses.

Financial assets at fair value through profi t or loss

Financial assets at FVTPL has two subcategories, including fi nancial assets held for trading and those designated as at

FVTPL on initial recognition.

A fi nancial asset is classifi ed as held for trading if:

• it has been acquired principally for the purpose of selling in the near future; or

• it is a part of an identifi ed portfolio of fi nancial instruments that the Group manages together and has a recent

actual pattern of short-term profi t-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

58



g) Financial Instruments (continued)

Financial assets at fair value through profi t or loss (continued)

A fi nancial asset other than a fi nancial asset held for trading may be designated as at FVTPL upon initial recognition if:

• such designation eliminates or signifi cantly reduces a measurement or recognition inconsistency that would

otherwise arise; or

• the fi nancial asset forms part of a group of fi nancial assets or fi nancial liabilities or both, which is managed and its

performance is evaluated on a fair value basis, in accordance with the Groups documented risk management or

investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and permits the entire combined

contract (asset or liability) to be designated as at FVTPL.

At each balance sheet date subsequent to initial recognition, fi nancial assets at FVTPL are measured at fair value, with

changes in fair value recognised directly in profi t or loss in the period in which they arise. The net gain or loss recognised

in profi t or loss includes any dividend or interest earned on the fi nancial assets.

Loans and receivables

Loans and receivables are non-derivative fi nancial assets with fi xed or determinable payments that are not quoted in

an active market. At each balance sheet date subsequent to initial recognition, loans and receivables (including trade

receivables, loan receivables, other receivables, pledged bank deposits, bank balances and cash, amount due from

directors and fi nance lease receivables) are carried at amortised cost using the effective interest method, less any

identifi ed impairment losses (see accounting policy in respect of impairment loss on fi nancial assets below).

Held-to-maturity investments

Held-to-maturity investments are non-derivative fi nancial assets with fi xed or determinable payments and fi xed maturities

that the Group’s management has the positive intention and ability to hold to maturity. The Group designated certain

debt securities as held-to-maturity investments. At each balance sheet date subsequent to initial recognition, held-to-

maturity investments are measured at amortised cost using the effective interest method, less any identifi ed impairment

losses (see accounting policy in respect of impairment loss on fi nancial assets below).





Available-for-sale fi nancial assets

Available-for-sale fi nancial assets are non-derivatives that are either designated or not classifi ed as fi nancial assets at

FVTPL, loans and receivables or held-to-maturity investments. In addition to equity investments, the Group has also

designated certain debt securities as available-for-sale fi nancial assets.

At each balance sheet date subsequent to initial recognition, available-for-sale fi nancial assets are measured at fair value.

Changes in fair value are recognised in equity, until the fi nancial asset is disposed of or is determined to be impaired, at

which time, the cumulative gain or loss previously recognised in equity is removed from equity and recognised in profi t

or loss (see accounting policy in respect of impairment loss on fi nancial assets below).

For available-for-sale equity investments that do not have a quoted market price in an active market and whose fair value

cannot be reliably measured and derivatives that are linked to and must be settled by delivery of such unquoted equity

instruments, they are measured at cost less any identifi ed impairment losses at each balance sheet date subsequent to

initial recognition (see accounting policy in respect of impairment loss on fi nancial assets below).

Impairment of fi nancial assets

Financial assets, other than those at FVTPL, are assessed for indicators of impairment at each balance sheet date.

Financial assets are impaired where there is objective evidence that, as a result of one or more events that occurred after

the initial recognition of the fi nancial asset, the estimated future cash fl ows of the fi nancial assets have been impacted.

For an available-for-sale equity investment, a signifi cant or prolonged decline in the fair value of that investment below

its cost is considered to be objective evidence of impairment.

For all other fi nancial assets, objective evidence of impairment could include:

• signifi cant fi nancial diffi culty of the issuer or counterparty; or

• default or delinquency in interest or principal payments; or

• it becoming probable that the borrower will enter bankruptcy or fi nancial re-organisation.

For certain categories of fi nancial asset, such as trade receivables, assets that are assessed not to be impaired

individually are subsequently assessed for impairment on a collective basis. Objective evidence of impairment for a

portfolio of receivables could include the Group’s past experience of collecting payments, an increase in the number

of delayed payments in the portfolio past the average credit period of 60 days, observable changes in national or local

economic conditions that correlate with default on receivables.

60




Impairment of fi nancial assets (continued)

For fi nancial assets carried at amortised cost, an impairment loss is recognised in profi t or loss when there is objective

evidence that the asset is impaired, and is measured as the difference between the asset’s carrying amount and the

present value of the estimated future cash fl ows discounted at the original effective interest rate.

For fi nancial assets carried at cost, the amount of the impairment loss is measured as the difference between the asset’s

carrying amount and the present value of the estimated future cash fl ows discounted at the current market rate of return

for a similar fi nancial asset. Such impairment loss will not be reversed in subsequent periods.

The carrying amount of the fi nancial asset is reduced by the impairment loss directly for all fi nancial assets with the

exception of trade receivables, where the carrying amount is reduced through the use of an allowance account. Changes

in the carrying amount of the allowance account are recognised in profi t or loss. When a trade receivable is considered

as uncollectible, it is written off against the allowance account. Subsequent recoveries of amounts previously written off

are credited to profi t or loss.

For fi nancial assets measured at amortised cost, if, in a subsequent period, the amount of impairment loss decreases and

the decrease can be related objectively to an event occurring after the impairment loss was recognised, the previously

recognised impairment loss is reversed through profi t or loss to the extent that the carrying amount of the asset at the

date the impairment is reversed does not exceed what the amortised cost would have been had the impairment not

been recognised.

Impairment losses on available-for-sale equity investments will not be reversed in profi t or loss in subsequent periods.

Any increase in fair value subsequent to impairment loss is recognised directly in equity. For available-for-sale debt

investments, impairment losses are subsequently reversed if an increase in the fair value of the investment can be

objectively related to an event occurring after the recognition of the impairment loss.

Financial liabilities and equity

Financial liabilities and equity instruments issued by a group entity are classifi ed according to the substance of the

contractual arrangements entered into and the defi nitions of a fi nancial liability and an equity instrument.

An equity instrument is any contract that evidences a residual interest in the assets of the group after deducting all of

its liabilities. The Group’s fi nancial liabilities are generally classifi ed into fi nancial liabilities at FVTPL and other fi nancial

liabilities.





Effective interest method

The effective interest method is a method of calculating the amortised cost of a fi nancial liability and of allocating interest

expense over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash

payments through the expected life of the fi nancial liability, or, where appropriate, a shorter period.

Interest expense is recognised on an effective interest basis other than those fi nancial liabilities designated as at FVTPL,

of which the interest expense is included in net gains or losses.

Financial liabilities at fair value through profi t or loss

Financial liabilities at FVTPL has two subcategories, including fi nancial liabilities held for trading and those designated

as at FVTPL on initial recognition.

A fi nancial liability is classifi ed as held for trading if:

• it has been incurred principally for the purpose of repurchasing in the near future; or

• it is a part of an identifi ed portfolio of fi nancial instruments that the Group manages together and has a recent

actual pattern of short-term profi t-taking; or

• it is a derivative that is not designated and effective as a hedging instrument.

A fi nancial liability other than a fi nancial liability held for trading may be designated as at FVTPL upon initial recognition

if:

• such designation eliminates or signifi cantly reduces a measurement or recognition inconsistency that would

otherwise arise; or

• the fi nancial liability forms part of a group of fi nancial assets or fi nancial liabilities or both, which is managed and

its performance is evaluated on a fair value basis, in accordance with the Group’s documented risk management

or investment strategy, and information about the grouping is provided internally on that basis; or

• it forms part of a contract containing one or more embedded derivatives, and HKAS 39 permits the entire

combined contract (asset or liability) to be designated as at FVTPL.

At each balance sheet date subsequent to initial recognition, fi nancial liabilities at FVTPL are measured at fair value, with

changes in fair value recognised directly in profi t or loss in the period in which they arise. The net gain or loss recognised

in profi t or loss includes any interest paid on the fi nancial liability.

62




Other fi nancial liabilities

Other fi nancial liabilities (including bank and other borrowings, trade payables and other payables) are subsequently

measured at amortised cost, using the effective interest method.

Equity instruments

Equity instruments issued by the Company are recorded at the proceeds received, net of direct issue costs.

Repurchase of the Company’s own equity instruments is recognised and deducted directly in equity. No gain or loss is

recognised in profi t or loss on the purchase, sale, issue or cancellation of the Company’s own equity instruments.

Derivative fi nancial instruments

Derivatives are initially recognised at fair value at the date a derivative contract is entered into and are subsequently

remeasured to their fair value at each balance sheet date. The resulting gain or loss is recognised in profi t or loss

immediately unless the derivative is designated and effective as a hedging instrument, in which event the timing of the

recognition in profi t or loss depends on the nature of the hedge relationship.

h) Property, Plant and Equipment

Property, plant and equipment are stated in the balance sheet at cost less accumulated depreciation and impairment

losses (see note 2(k)).

Gain or losses arising from the retirement or disposal of an item of property, plant and equipment are determined as the

difference between the net disposal proceeds on disposal and the carrying amount of the item and are recognised in

profi t or loss on the date of retirement or disposal.

Depreciation is calculated to write off the cost of items of property, plant and equipment, less their estimated residual

value, if any, using the straight line method over their estimated useful lives as follows:

Freehold land and building 2.5%

Cruise 5%

Leasehold improvements Over lease terms

Plant and machinery 20%

Furniture, fi ttings and offi ce equipment 20% – 33 1/3%

Motor vehicles 30% – 33 1/3%

Motor yacht 20%




h) Property, Plant and Equipment (continued)

Where parts of an item of property, plant and equipment have different useful lives, the cost of the item is allocated on

a reasonable basis between the parts and each part is depreciated separately. Both the useful life of an asset and its

residual value, if any, are reviewed annually.

i) Intangible Assets (Other than Goodwill)

Intangible assets, other than goodwill, identifi ed on business combinations are capitalised on their fair values. They

represent mainly trademarks and relationship with customers. Subsequent to initial recognition, intangible assets with

fi nite useful lives are carried at cost less accumulated amortisation and accumulated impairment losses. Amortisation for

intangible assets with fi nite useful lives is provided a straight-line basis from the date of acquisition over their estimated

useful lives as follows:

Client list 15 years

The asset’s useful lives and their amortisation method are reviewed annually.

Intangible assets with indefi nite useful lives are not amoritsed. The intangible asset and its status are reviewed annually

to determine whether events and circumstances continue to support indefi nite useful life. Should the useful life of an

intangible asset change from infi nite to fi nite, the change would be accounted for prospectively from the date of change

and in accordance with the policy for amortisation of intangible assets with fi nite lives as set out above.

j) Operating Lease Charges

Where the Group has the use of assets held under operating leases, payments made under the leases are charged to

profi t or loss in equal instalments over the accounting periods covered by the lease term, except where an alternative

basis is more representative of the pattern of benefi ts to be derived from the leased asset. Lease incentives received

are recognised in profi t or loss as an integral part of the aggregate net lease payments made. Contingent rentals are

charged to profi t or loss in the accounting period in which they are incurred.

64



k) Impairment of Assets

i) Impairment of investments in debt and equity securities and other receivables

Investments in debt and equity securities and other current and non-current receivables that are stated at cost

or amortised cost or are classifi ed as available-for-sale securities are reviewed at each balance sheet date to

determine whether there is objective evidence of impairment. If any such evidence exists, any impairment loss is

determined and recognised as follows:

– For unquoted equity securities and current receivables that are carried at cost, the impairment loss is

measured as the difference between the carrying amount of the fi nancial asset and the estimated future

cash fl ows, discounted at the current market rate of return for a similar fi nancial asset where the effect of

discounting is material. Impairment losses for current receivables are reversed if in a subsequent period the

amount of the impairment loss decreases. Impairment losses for equity securities are not reversed.

– For fi nancial assets carried at amortised cost, the impairment loss is measured as the difference between

the asset’s carrying amount and the present value of estimated future cash fl ows, discounted at the fi nancial

asset’s original effective interest rate (i.e. the effective interest rate computed at initial recognition of these

assets).

If in a subsequent period the amount of an impairment loss decreases and the decrease can be linked objectively

to an event occurring after the impairment loss was recognised, the impairment loss is reversed through profi t or

loss. A reversal of an impairment loss shall not result in the asset’s carrying amount exceeding that which would

have been determined had no impairment loss been recognised in prior years.

– For available-for-sale securities, the cumulative loss that had been recognised directly in equity is removed

from equity and is recognised in profi t or loss. The amount of the cumulative loss that is recognised in profi t

or loss is the difference between the acquisition cost (net of any principal repayment and amortisation) and

current fair value, less any impairment loss on that asset previously recognised in profi t or loss.

Impairment losses recognised in profi t or loss in respect of available-for-sale equity securities are not reversed

through profi t or loss. Any subsequent increase in the fair value of such assets is recognised directly in equity.

Impairment losses in respect of available-for-sale debt securities are reversed if the subsequent increase in fair

value can be objectively related to an event occurring after the impairment loss was recognised. Reversals of

impairment losses in such circumstances are recognised in profi t or loss.




k) Impairment of Assets (continued)

ii) Impairment of other assets

Internal and external sources of information are reviewed at each balance sheet date to identify indications that

the following assets may be impaired or, except in the case of goodwill, an impairment loss previously recognised

no longer exists or may have decreased:

– property, plant and equipment;

– intangible assets;

– investments in subsidiaries and associates; and

– goodwill

If any such indication exists, the asset’s recoverable amount is estimated. In addition, for goodwill, the recoverable

amount is estimated annually whether or not there is any indication of impairment.

– Calculation of recoverable amount

The recoverable amount of an asset is the greater of its net selling price and value in use. In assessing value

in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate

that refl ects current market assessments of time value of money and the risks specifi c to the asset. Where

an asset does not generate cash infl ows largely independent of those from other assets, the recoverable

amount is determined for the smallest group of assets that generates cash infl ows independently (i.e. a

cash-generating unit).

– Recognition of impairment losses

An impairment loss is recognised in profi t or loss whenever the carrying amount of an asset, or the cash-

generating unit to which it belongs, exceeds its recoverable amount. Impairment losses recognised in

respect of cash-generating units are allocated fi rst to reduce the carrying amount of any goodwill allocated

to the cash-generating unit (or group of units) and then, to reduce the carrying amount of the other assets

in the unit (or group of units) on a pro rata basis, except that the carrying value of asset will not be reduced

below its individual fair value less costs to sell, or value in use, if determinable.

– Reversals of impairment losses

In respect of assets other than goodwill, an impairment loss is reversed if there has been a favourable

change in the estimates used to determine the recoverable amount. An impairment loss in respect of

goodwill is not reversed.

A reversal of an impairment loss is limited to the asset’s carrying amount that would have been determined

had no impairment loss been recognised in prior years. Reversals of impairment losses are credited to profi t

or loss in the year in which the reversals are recognised.

66



l) Inventories

Inventories are carried at the lower of cost and net realizable value.

Cost is calculated using the fi rst-in, fi rst-out formula and comprises all costs of purchase in bringing the inventories to

their present location and condition.

Net realizable value is the estimated selling price in the ordinary course of business less the estimated costs of completion

and the estimated costs necessary to make the sale.

When inventories are consumed, the carrying amount of those inventories is recognised as an expense in the period

in which the related revenue is recognised. The amount of any write down of inventories to net realizable value and

all losses of inventories are recognised as an expense in the period the write down of inventories is recognised as a

reduction in the amount of inventories recognised as an expense in the period in which the reversal occurs.

m) Trade and Other Receivables

Trade and other receivables are initially recognised at fair value and thereafter stated at amortised cost less impairment

losses for bad and doubtful debts (see note 2(k)), except where the receivables are interest-free loans made to related

parties without any fi xed repayment terms or the effect of discounting would be immaterial. In such cases, the receivables

are stated at cost less impairment losses for bad and doubtful debts (see note 2(k)).

n) Trade and Other Payables

Trade and other payables are initially recognised at fair value and thereafter stated at amortised cost unless the effect of

discounting would be immaterial, in which case they are stated at cost.

o) Cash and Cash Equivalents

Cash and cash equivalents comprise cash at bank and on hand, demand deposits with banks and other fi nancial

institutions, and short-term, highly liquid investments that are readily convertible into known amounts of cash and which

are subject to an insignifi cant risk of changes in value, having been within three months of maturity at acquisition. Bank

overdrafts that are repayable on demand and form an integral part of the Group’s cash management are also included

as a component of cash and cash equivalents for the purpose of the consolidated cash fl ow statement.

p) Employee Benefi ts

i) Short term employee benefi ts and contributions to defi ned contribution retirement plans.

Salaries, annual bonuses, paid annual leave, contributions to defi ned contribution plans and the cost of non-

monetary benefi ts are accrued in the year in which the associated services are rendered by employees. Where

payment or settlement is deferred and the effect would be material, these amounts are stated at their present

values.




p) Employee Benefi ts (continued)

ii) Termination benefi ts

Termination benefi ts are recognised when, and only when, the Group demonstrably commits itself to terminate

employment or to provide benefi ts as a result of voluntary redundancy by having a detailed formal plan which is

without realistic possibility of withdrawal.

q) Income Tax

Income tax for the year comprises current tax and movements in deferred tax assets and liabilities. Current tax and

movements in deferred tax assets and liabilities are recognised in profi t or loss except to the extent that they relate to

items recognised directly in equity, in which case they are recognised in equity.

Current tax is the expected tax payable on the taxable income for the year, using tax rates enacted or substantively

enacted at the balance sheet date, and any adjustment to tax payable in respect of previous years.

Deferred tax assets and liabilities arise from deductible and taxable temporary differences respectively, being the

differences between the carrying amounts of assets and liabilities for fi nancial report purposes and their tax bases.

Deferred tax assets also arise from unused tax losses and unused tax credits.

Apart from certain limited exceptions, all deferred tax liabilities, and all deferred tax assets to the extent that it is probable

that future taxable profi ts will be available against which the asset can be utilised, are recognised. Future taxable profi ts

that may support the recognition of deferred tax assets arising from deductible temporary differences include those

that will arise from the reversal of existing taxable temporary differences, provided those differences relate to the same

taxation authority and the same taxable entity, and are expected to reverse either in the same period as the expected

reversal of the deductible temporary difference or in period into which a tax loss arising from the deferred tax asset

can be carried back or forward. The same criteria are adopted when determining whether existing taxable temporary

differences support the recognition of deferred tax assets arising from unused tax losses and credits, that is, those

differences are taken into account if they relate to the same taxation authority and the same taxable entity, and are

expected to reverse in a period, or periods, in which the tax loss or credit can be utilized.

The limited exceptions to recognition of deferred tax assets and liabilities are those temporary differences arising from

goodwill not deductible for tax purposes, the initial recognition of assets or liabilities that affect neither accounting nor

taxable profi t (provided they are not part of a business combination), and temporary differences related to investments

in subsidiaries to the extent that, in the case of taxable differences, the Group controls the timing of the reversal and it

is probable that the differences will not reverse in the foreseeable future, or in the case of deductible differences, unless

it is probable that they will reserve in the future.

The amount of deferred tax recognised is measured based on the expected manner of realisation or settlement of the

carrying amount of the assets and liabilities, using tax rates enacted or substantively enacted at the balance sheet date.

Deferred tax assets and liabilities are not discounted.

68



q) Income Tax (continued)

The carrying amount of a deferred tax asset is reviewed at each balance sheet date and is reduced to the extent that it

is no longer probable that suffi cient taxable profi ts will be available to allow the related tax benefi t to be utilised. Any such

reduction is reversed to the extent that it becomes probable that suffi cient taxable profi ts will be available.

Additional income taxes that arise from the distribution of dividends are recognised when the liability to pay the related

dividends is recognised.

Current tax balances and deferred tax balances, and movements therein, are presented separately from each other and

are not offset. Current tax assets are offset against current tax liabilities, and deferred tax assets against deferred tax

liabilities, if the company or the Group has the legally enforceable right to set off current tax assets against current tax

liabilities and the following additional conditions are met:

– in the case of current tax assets and liabilities, the Company or the Group intends either to settle on a net basis,

or to realize the asset and settle the liability simultaneously; or

– in the case of deferred tax assets and liabilities, if they relate to income taxes levied by the same taxation authority

on either;

– the same taxable entity; or

– different taxable entities, which, in each future period in which signifi cant amounts of deferred tax liabilities

or assets are expected to be settled or recovered, intend to realize the current tax assets and settle the

current tax liabilities on a net basis or realize and settle simultaneously.

r) Financial Guarantees Issued, Provisions and Contingent Liabilities

i) Financial guarantees issued

Financial guarantees are contracts that require the issuer (i.e. the guarantor) to make specifi ed payments to

reimburse the benefi ciary of the guarantee (the “holder”) for a loss the holder incurs because a specifi ed debtor

fails to make payment when due in accordance with the terms of a debt instrument.

Where the Group issues a fi nancial guarantee, the fair value of the guarantee (being the transaction price, unless

the fair value can otherwise be reliably estimated) is initially recognised as deferred income within trade and other

payables. Where consideration is received or receivable for the issuance of the guarantee, the consideration

is recognised in accordance with the Group’s policies applicable to that category of asset. Where no such

consideration is received or receivable, an immediate expense is recognised in profi t or loss on initial recognition

of any deferred income.




r) Financial Guarantees Issued, Provisions and Contingent Liabilities (continued)

i) Financial guarantees issued (continued)

The amount of the guarantee initially recognised as deferred income is amortised in profi t or loss over the term of

the guarantee as income from fi nancial guarantees issued. In addition, provisions are recognised in accordance

with note 2(r)(ii) if and when (i) it becomes probable that the holder of the guarantee will call upon the Group under

the guarantee, and (ii) the amount of that claim on the Group is expected to exceed the amount currently carried

in trade and other payables in respect of that guarantee i.e. the amount initially recognised, less accumulated

amortisation.

ii) Other provisions and contingent liabilities

Provisions are recognised for other liabilities of uncertain timing or amount when the Group or the Company has

a legal or constructive obligation arising as a result of a past event, it is probable that an outfl ow of economic

benefi ts will be required to settle the obligation and a reliable estimate can be made. Where the time value of

money is material, provisions are stated at the present value of the expenditure expected to settle the obligation.

Where it is not probable that an outfl ow of economic benefi ts will be required, or the amount cannot be estimated

reliably, the obligation is disclosed as a contingent liability, unless the probability of outfl ow of economic benefi ts

is remote. Possible obligations, whose existence will only be confi rmed by the occurrence or non-occurrence of

one or more future events are also disclosed as contingent liabilities unless the probability of outfl ow of economic

benefi ts is remote.

s) Revenue Recognition

Provided it is probable that the economic benefi ts will fl ow to the Group and the revenue and costs, if applicable, can

be measured reliably, revenue is recognised in profi t or loss as follows:

i) Cruise Leasing and management fee income

– Cruise leasing income is recognised on an accrual basis in accordance with the terms of the leasing

agreement.

– Cruise management fee income, revenue from travel agent services and management income is recognised

when the management services, travel agent services are rendered.

ii) Travel-related agency services fee income

– Revenue from sale of airline ticket is recognized when the tickets are issued.

– Revenue from the sale of tour package is recognized when travel arrangements have been booked and

confi rmed with customers. Deposits from customers are reported as liabilities.

70



s) Revenue Recognition (continued)

ii) Travel-related agency services fee income (continued)

– Revenue from the sale of group tour is recognized at the point of group departure. Deposits from customers

are reported as liabilities until the tour departs.

– Other income consists of revenue earned based on volume sales through various on-line ticket processing

systems. Other income is recognised when it is measurable and all contractual obligation have been

fulfi lled.

iii) Management fee income is recognised when the amounts are measurable and the ultimate collections are

reasonably assumed.

iv) Dividend income from unlisted investments is recognised when the shareholder’s right to receive payment is

established.

v) Interest income is recognised as it accrues using the effective interest method.

vi) Services income are recognised when services provided.

t) Translation of Foreign Currencies

Foreign currency transactions during the year are translated at the foreign exchange rates ruling at the transaction dates.

Monetary assets and liabilities denominated in foreign currencies are translated at the foreign exchange rates ruling at

the balance sheet date. Exchange gains and loses are recognised in profi t or loss.

Non-monetary assets and liabilities that are measured in terms of historical cost in a foreign currency are translated

using the foreign exchange rates ruling at the transaction dates. Non-monetary assets and liabilities denominated in

foreign currencies that are stated at fair value are translated using the foreign exchange rates ruling at the dates the fair

value was determined.

The results of foreign operations are translated into Hong Kong dollars at the exchange rates approximating the foreign

exchange rates ruling at the dates of the transactions. Balance sheet items, including goodwill arising on consolidation

of foreign operations acquired on or after 1 January 2005, are translated into Hong Kong dollars at the foreign exchange

rates ruling at the balance sheet date. The resulting exchange differences are recognised directly in a separate component

of equity. Goodwill arising on consolidation of a foreign operation acquired before 1 January 2005 is translated at the

foreign exchange rate that applied at the date of acquisition of the foreign operation.

On disposal of a foreign operation, the cumulative amount of the exchange differences recognised in equity which relate

to that foreign operation is included in the calculation of the profi t or loss on disposal.




u) Borrowing Costs

Borrowing costs are expensed in profi t or loss in the period in which they are incurred, except to the extent that they

are capitalised as being directly attributable to the acquisition, construction or production of an asset which necessarily

takes a substantial period of time to get ready for its intended use or sale.

The capitalisation of borrowing costs as part of the cost of a qualifying asset commences when expenditure for the

asset is being incurred, borrowing costs are being incurred and activities that are necessary to prepare the asset for its

intended use or sale are in progress. Capitalisation of borrowing costs is suspended or ceases when substantially all the

activities necessary to prepare the qualifying asset for its intended use or sale are interrupted or complete.

v) Related Parties

For the purposes of these fi nancial statements, a party is considered to be related to the Group if:

i) the party has the ability, directly or indirectly through one or more intermediaries, to control the Group or exercise

signifi cant infl uence over the Group in making fi nancial and operating policy decisions, or has joint control over

the Group;

ii) the Group and the party are subject to common control;

iii) the party is an associate of the Group or a joint venture in which the Group is a venturer;

iv) the party is a member of key management personnel of the Group or the Group’s parent, or a close family member

of such an individual, or is an entity under the control, joint control or signifi cant infl uence or such individuals;

v) the party is a close family member of a party referred to in (i) or is an entity under the control, joint control or

signifi cant infl uence of such individuals; or

vi) the party is a post-employment benefi t plan which is for the benefi t of employees of the Group or of any entity that

is a related party of the Group.

Close family members of an individual are those family members who may be expected to infl uence, or be infl uenced

by, that individual in their dealings with the entity.

72



w) Segment Reporting

A segment is a distinguishable component of the Group that is engaged either in providing products or services (business

segment), or in providing products or services within a particular economic environment (geographical segment), which

is subject to risks and rewards that are different from those of other segments.

In accordance with the Group’s internal fi nancial reporting, the Group has chosen business segment information as the

primary reporting format and geographical segment information as the secondary reporting format for the purposes of

these fi nancial statements.

Segment revenue, expenses, results, assets and liabilities include items directly attributable to a segment as well as those

that can be allocated on a reasonable basis to that segment. For example, segment assets may include inventories,

trade receivables and property, plant and equipment. Segment revenue, expenses, assets, and liabilities are determined

before intra-group balances and intra-group transactions are eliminated as part of the consolidation process, except

to the extent that such intra-group balances and transactions are between Group enterprises within a single segment.

Inter-segment pricing is based on similar terms as those available to other external parties.

Segment capital expenditure is the total cost incurred during the period to acquire segment assets (both tangible and

intangible) that are expected to be used for more than one period.

Unallocated items mainly comprise fi nancial and corporate assets, interest-bearing loans, borrowings, tax balances,

corporate and fi nancing expenses.

3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”)

In the current period, the Company has where applicable applied the following amendments and interpretations (“new

HKFRSs”) issued by the Hong Kong Institute of Certifi ed Public Accountants (“HKICPA”) which are or have become effective.

HKFRS 7 Financial Instruments: Disclosures

HKAS 1 Amendment Presentations of Financial Statements: Capital Disclosures

The amendment to HKAS 1 introduces additional disclosure requirements to provide information about the level of capital and

the Group’s and the Company’s objectives, policies and process for managing capital. These new disclosures are set out in

below.

HKAS 39 & HKFRS 7 Reclassifi cation of Financial Assets

(Amendments)

HK(IFRIC) – Int 11 HKFRS 2: Group and Treasury Share Transactions

HK(IFRIC) – Int 12 Service Concession Arrangements

HK(IFRIC) – Int 14 HKAS 19 – The Limit on a Defi ned Benefi t Asset,

Minimum Funding Requirements and their interaction



3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) (CONTINUED)

As a result of the adoption of HKFRS 7, the fi nancial statements include expanded disclosure about the signifi cant of the

Group’s fi nancial instruments and the nature and extent of risks arising from those instruments, compared with the information

previously required to be disclosed by HKAS 32, Financial Instruments: Disclosure and Presentation. These disclosures are

provided throughout these fi nancial statements, in particular in note 4.

The application of the new HKFRSs had no material effect on how the results and fi nancial position for the current or prior

accounting periods have been prepared and presented. Accordingly, no prior adjustment is required.

The Group has not early applied any of the following new and revised standards, amendments or interpretations which have

been issued but are not yet effective for annual periods beginning on 1 January 2008. The Group is in the process of making

an assessment of the impact of these new standards, amendments and interpretations upon initial application but is not yet

in a position to state whether these new standards, amendments and interpretations would have a signifi cant impact on the

group’s results of operations and fi nancial position.

HKFRSs (Amendments) Improvements to HKFRSs 1

HKAS 1 (Revised) Presentation of Financial Statements 2

HKAS 23 (Revised) Borrowing Costs 2

HKAS 27 (Revised) Consolidated and Separate Financial Statements 3

HKAS 32 & 1 (Amendments) Puttable Financial Instruments and Obligation Arising on Liquidation 2

HKAS 39 (Amendment) Eligible hedged items 3

HKFRS 1 and HKAS 27 Cost of an Investment in a Subsidiary, Jointly Controlled Entity or Associate 2

(Amendments)

HKFRS 1 (Revised) First-time Adoption of Hong Kong Financial Reporting Standard 3

HKFRS 2 (Amendments) Vesting Conditions and Cancellations 2

HKFRS 3 (Revised) Business Combinations 3

HKFRS 8 Operating Segments 2

HK(IFRIC) – Int 13 Customer Loyalty Programmes 4

HK(IFRIC) – Int 15 Agreements for the Construction of Real Estate 2

HK(IFRIC) – Int 16 Hedges of a Net Investment in a Foreign Operation 5

HK(IFRIC) – Int 17 Distributions of Non-cash Assets to Owners 3

HK(IFRIC) – Int 18 Transfer of Assets from Customers 6

1 Effective for annual periods beginning on or after 1 January 2009 except for the amendments to HKFRS 5, effective for annual periods

beginning on or after 1 July 2009

2 Effective for annual periods beginning on or after 1 January 2009

3 Effective for annual periods beginning on or after 1 July 2009

4 Effective for annual periods beginning on or after 1 July 2008

5 Effective for annual periods beginning on or after 1 October 2008

6 Effective for transfer of assets from customers received on or after 1 July 2009

74


3. APPLICATION OF NEW AND REVISED HONG KONG FINANCIAL REPORTING STANDARDS (“HKFRSs”) (CONTINUED)

The application of HKFRS 3 (Revised) may affect the accounting for business combination for which the acquisition date is on

or after the beginning of the fi rst annual reporting period beginning on or after 1 July 2009.

HKAS 27 (Revised) will affect the accounting treatment for changes in a parent’s ownership interest in a subsidiary.

4. FINANCIAL RISK MANAGEMENT

a) Financial risk factors

The Group has exposure to credit risk, liquidity risk and market risk (including currency risk and interest rate risk) from its

use of fi nancial instruments. This note presents information about the Group’s exposure to each of the above risks, the

Group’s objectives, policies and processes for measuring and managing risk, and the Group’s management of capital.

(i) Credit risk

Credit risk is the risk of fi nancial loss to the Group if a customer or counterparty to a fi nancial instrument fails

to meet its contractual obligations, and the Group’s credit risk is primarily attributable to the trade and other

receivables and cash and cash equivalents. Management has a credit policy in a place and the exposures to

these credit risks are monitored on an ongoing basis.

The management has established a credit policy under which credit evaluations are performed on all customers

requiring credit. Trade receivables are normally due within 30 days from the date of billing. Debtors with balances

that are more than 3 months are requested to settle all outstanding balance before any further credit is granted.

Normally, the Group does not obtain collateral from customers.

The Group’s exposure to credit risk is infl uenced mainly by the individual characteristics of each customer. At the

balance sheet date, the Group has a certain concentration of credit risk as 38.8% (2007: 3.3%) of the total trade

and other receivables was due from the Group’s largest customer.

The maximum exposure to credit risk without taking account of any collateral held is represented by the carrying

amount of each fi nancial asset, including derivative fi nancial instruments, in the consolidated balance sheet after

deducting any impairment allowance. Except for the fi nancial guarantees given by the Company as set out in

notes 33 to 38, the Group does not provide any other guarantees which would expose the Group or the Company

to credit risk, The maximum exposure to credit risk in respect of this fi nancial guarantee at the Company’s balance

sheet is disclosed in notes 33 to 38.

Further quantitative disclosures in respect of the Group’s exposure to credit risk arising from trade and other

receivables are set out in note 24.



4. FINANCIAL RISK MANAGEMENT (CONTINUED)

a) Financial risk factors (continued)

(ii) Liquidity risk

Liquidity risk is the risk that the Group will not be able to meet its fi nancial obligations as they fall due. The

Group’s policy is to regularly monitor its current and expected liquidity requirement and its compliance with

lending covenants, to ensure that it maintains suffi cient reserves of cash and adequate committed lines of funding

from major fi nancial institutions to meet its liquidity requirements in the short and longer term.

The following table details the remaining contractual maturities at the balance sheet date of the Group’s fi nancial

liabilities, which are based on the contractual maturity date. The amounts disclosed in the table are the contractual

undiscounted cash fl ows (including interest payments computed using contractual rates or, if fl oating, based on

rates current at the balance sheet date) and the earliest date the Group can be required to pay:

Group

At 31.12.2008

More than More than Total

1 year but 2 years but contractual

Within 1 year less than less than undiscounted Carrying

or on demand 2 years 5 years cash fl ow amount

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Trade and other payables 23,457 – – 23,457 23,457

Profi t guarantee liabilities 3,792 9,100 32,608 45,500 45,500

Loans payables – 128,471 39,486 167,957 167,957

Long-term payables – – 295,632 295,632 187,048

Due to a related company – 18,277 – 18,277 17,574

27,249 155,848 367,726 550,823 441,536

Group

At 30.9.2007





HK$’000 HK$’000 HK$’000 HK$’000 HK$’000


76




(ii) Liquidity risk (continued)

Company

At 31.12.2008





HK$’000 HK$’000 HK$’000 HK$’000 HK$’000


At 30.9.2007





HK$’000 HK$’000 HK$’000 HK$’000 HK$’000


Group

As at 31 December 2008, it was not probable that the counter parties to the fi nancial guarantee will claim under

the contracts. Consequently, the carrying amount of the fi nancial guarantee contract of HK$44,100,000 (2007:

HK$63,000,000) has not been presented above.

At 31.12.2008 At 30.9.2007

HK$’000 Expiry period HK$’000 Expiry period

Guarantee given to a bank in

respect of banking facilities

granted to an associate 860,000 2012 860,000 2012





(iii) Currency risk

Presently, there is no hedging policy with respect to the foreign exchange exposure. The Group’s transactional

currency are Hong Kong dollars, Canadian dollars and United States dollars as substantially all the turnover are

in Hong Kong dollars, Canadian dollars and United States dollars. The Group’s and the Company’s transactional

foreign exchange exposure was insignifi cant.

(iv) Interest rate risk

The Group’s exposure to market risk for changes in interest rates. Interest rate risk arises primarily from the

amount due to a related company. Borrowings issued at variable rates and fi xed rates exposure the Group to cash

fl ow interest rate risk and fair value interest rate risk respectively. The Group does not use fi nancial derivatives to

hedge against the interest rate risk. The Company has no signifi cant exposure to interest rate risk.

At 31 December 2008, it is estimated that a general increase/decrease of 100 basis points in interest rates,

with all other variables held constant, would increase/decrease the Group’s loss before tax by approximately

HK$176,000 (2007: N/A).

The sensitivity analysis above has been determined assuming that the change in interest rates had occurred

at the balance sheet date and had been applied to the exposure to interest rate risk for the fi nancial liabilities

in existence at that date. The 100 basis points increase or decrease represents management’s assessment of

reasonably possible change in interest rates over the period until the next annual balance sheet date. The analysis

is performed, on the same basis for 2007.

b) Capital risk management

The Group’s primary objectives when managing capital are to safeguard the Group’s ability to continue as a going

concern, so that it can continue to provide returns for shareholders and benefi ts for other stakeholders and to maintain

an optimal capital structure to reduce the cost of capital.

78



b) Capital risk management (continued)

The Group actively and regularly reviews and manages its capital structure to maintain a balance between the higher

shareholder returns that might be possible with higher level of borrowings and the advantages and security afforded by

a sound capital position, and makes adjustments to the capital structure in light of changes in economic conditions.

The Group monitors its capital structure on the basis of a net debt-to-adjusted capital ratio. For this purpose, the Group

defi nes net debt as total debt (which includes interest bearing bank and other borrowings) less bank deposits and cash.

Adjusted capital comprises all components of equity less unaccrued proposed dividends.

During the period ended 31 December 2008, the Group’s strategy, which was unchanged from 2007, was to maintain

the net debt-to-adjusted capital ratio as low as feasible. In order to maintain or adjust the ratio, the Group may adjust

the amount of dividends paid to shareholders, return capital to shareholders, issue new shares or sell assets to reduce

debt. As at 31 December 2008 and 30 September 2007, the Group did not have net debt.

Neither the Company nor any of its subsidiaries are subject to externally imposed capital requirements.

c) Fair value

The fair values of the Group’s fi nancial assets and fi nancial liabilities are determined in accordance with generally

accepted pricing models based on discounted cash fl ow analysis using prices or rates from observable current market

transactions. The directors consider that the carrying amounts of the fi nancial assets and fi nancial liabilities recorded

at amortised cost in the consolidated fi nancial statements are not materially different from their fair values as at 31

December 2008 and 30 September 2007.

5. ACCOUNTING ESTIMATES AND JUDGEMENTS

a) Key sources of estimation uncertainty

In the process of applying the Group’s accounting policies which are described in note 2, management has made

certain key assumptions concerning the future, and other key sources of estimated uncertainty at the balance sheet

date, that may have a signifi cant risk of causing a material adjustment to the carrying amounts of assets and liabilities

within the next fi nancial year, as discussed below.

i) Impairment of property, plant and equipment and freehold land and buildings

The recoverable amount of an asset is the greater of its net selling price and value in use. In assessing value

in use, the estimated future cash fl ows are discounted to their present value using a pre-tax discount rate that

refl ects current market assessments of the time value of money and the risks specifi c to the asset, which requires

signifi cant judgement relating to the level of revenue and the amount of operating costs. The Group uses all readily

available information in determining an amount that is a reasonable approximation of the recoverable amount,

including estimates based on reasonable and supportable assumptions and projections of revenue and operating

costs. Changes in these estimates could have a signifi cant impact on the carrying amount of the assets and could

result in additional impairment charge or reversal of impairment in future periods.



5. ACCOUNTING ESTIMATES AND JUDGEMENTS (CONTINUED)

a) Key sources of estimation uncertainty (continued)

ii) Impairment of receivables

The Group maintains impairment allowance for doubtful accounts based upon evaluation of the recoverability

of the trade receivables and other receivables, where applicable, at each balance sheet date. The estimates are

based on the aging of the trade receivables and other receivables balances and the historical write-off experience,

net of recoveries. If the fi nancial condition of the debtors were to deteriorate, additional impairment allowance

may be required.

iii) Impairment of intangible assets

The Group performs annual test on whether there has been impairment of intangible assets in accordance with

the accounting policy stated in note 2(k). The recoverable amounts of cash-generating units are determined

based on value-in-use calculations. These calculation require the use of estimates and assumptions made by

management on the future operation of the business, pre-tax discount rates, and other assumptions underlying

the value-in-use calculations.

iv) Amortisation of intangible assets

Intangible assets are amortised on a straight-line basis over their estimated useful lives. The determination of the

useful lives involves management’s estimation. The Group reassesses the useful life of the intangible assets and

if the expectation differs from the original estimate, such a difference may impact the amortisation in the year and

the estimate will be changed in the future period.

b) Critical accounting judgements in applying the Group’s accounting policies

In determining the carrying amounts of some assets and liabilities, the Group makes assumptions for the effects of

uncertain future events on those assets and liabilities at the balance sheet date. These estimates involve assumptions

about such items as cash fl ows and discount rates used. The Group’s estimates and assumptions are based on historical

experience and expectations of future events and are reviewed periodically. In addition to assumptions and estimations

of future events, judgements are also made during the process of applying the Group’s accounting policies.

i) Going concern

As mentioned in note 2(b)(i) to the fi nancial statements, the directors are satisfi ed that the Group will be able

to meet its fi nancial obligations in full as and when they fall due in the foreseeable future. As the directors are

confi dent that the Group will be able to continue in operational existence in the foreseeable future, the fi nancial

statements have been prepared on a going concern basis.

If the going concern basis is not appropriate, adjustment would have to be made to provide for any further

liabilities which might arise. Such adjustments may have a signifi cant consequential effect on the loss for the

period and net assets of the Group.

80



b) Critical accounting judgements in applying the Group’s accounting policies (Continued)

(ii) Maruhan Put Option

On 1 October 2007, Golden Sun, a wholly-owned subsidiary of the Company as vendor and the Company as

Golden Sun’s guarantor entered into a sale and purchase agreement with Maruhan Corporation (“Maruhan”), an

independent third party, as purchaser to dispose of (i) 10.2% interest in the entire issued share capital (the “World

Fortune Sale Shares”) of World Fortune Limited (“World Fortune”), a wholly-owned subsidiary of Golden Sun;

and (ii) the shareholder’s loan of approximately HK$66,468,000 due by World Fortune to Golden Sun for a total

consideration of approximately HK$208,501,000 (the “World Fortune Disposal”). The World Fortune Disposal was

completed on 29 October 2007.

On the date of completion of the World Fortune Disposal, Golden Sun, the Company and Maruhan entered into

a shareholders’ agreement (the “World Fortune Shareholders’ Agreement”). Pursuant to the terms of the World

Fortune Shareholders’ Agreement, (i) Golden Sun, in consideration of HK$1 paid by Maruhan, granted to Maruhan

the right to require Golden Sun to purchase or procure the purchase of Maruhan’s entire equity interest in World

Fortune and the entire amount of shareholder’s loans provided by Maruhan to World Fortune (the “Maruhan Put

Option”) and (ii) Maruhan shall advance to World Fortune a further sum of approximately HK$116,369,000 by way

of shareholder’s loan to World Fortune which will on-lend the same to Pier 16 – Property Development Limited

(“Pier 16-Property Development”) for the purpose of fi nancing and completing the development of the integrated

casino-resort project “Ponte 16”.

The Maruhan Put Option shall be exercised at any time on any business day during the period commencing from

the fi fth anniversary of 29 October 2007 and ending on the day falling six months thereafter. The Maruhan Put

Option purchase price shall be determined based on Maruhan’s effective interest of 4.998% in the properties held

by Pier 16-Property Development (the “Property”) and with reference to a 30% discount to the then prevailing

market value of the Property to be determined by an independent professional valuer to be agreed by the

shareholders of World Fortune. If the value of the Property as determined by the valuer after taking into account

a 30% discount exceeds HK$6,500 million or is below HK$3,900 million, the Maruhan Put Option purchase price

shall be HK$6,500 million or HK$3,900 million (as the case may be).

The directors considered that after the completion of the World Fortune Disposal, the Group still retains substantially

all the risks and rewards of ownership of the World Fortune Sale Shares. Therefore, the Group continues to

account for World Fortune as a wholly-owned subsidiary of the Group. The consideration of approximately

HK$208,501,000 received has been recognised as liabilities and classifi ed under loans payables (note 29) and

long–term payables (note 30) in the consolidated balance sheet. As the Group does not have the unconditional

rights to avoid settlement under the Maruhan Put Option, the Group has to recognise the relevant fi nancial

liabilities at the amount of the present value of the estimated future cash outfl ows when it is required to acquire

the World Fortune Sale Shares.




b) Critical accounting judgements in applying the Group’s accounting policies (Continued)

(iii) SBI Macau Put Option

On 7 July 2008, Favor Jumbo Limited (“Favor Jumbo”), a wholly-owned subsidiary of the Company, as vendor

and the Company as Favor Jumbo’s guarantor entered into a sale and purchase agreement with SBI Macau

Holdings Limited (“SBI Macau”), an independent third party, as purchaser to (i) dispose of 910 shares (the “Sale

Shares”) of Golden Sun Profi ts Limited (“Golden Sun”), being 4.55% of the entire issued share capital of Golden

Sun, a wholly-owned subsidiary of Favor Jumbo; and (ii) assign all the rights, title, interests and benefi ts of 4.55%

of the entire amount of the interest free shareholder’s loan amounted to approximately HK$39,486,000 due

by Golden Sun to SBI Macau at face value (collectively “the Golden Sun Disposal”). The total consideration for

the Golden Sun Disposal was HK$130,000,000. In addition, Favor Jumbo guaranteed that SBI Macau shall be

entitled to a return of not less than HK$9,100,000 for each full fi scal year for a period of sixty successive months

immediately after the date of completion of the Golden Sun Disposal. The details of the profi t guarantee have been

set out in note 28 to the fi nancial statements.

The Golden Sun Disposal was completed on 8 August 2008. On the date of completion of the Golden Sun

Disposal, Favor Jumbo, the Company, SBI Macau, SBI Holdings, Inc. (SBI Macau’s holding company) and Golden

Sun entered into a shareholders’ agreement (the “Golden Sun Shareholders’ Agreement”). Pursuant to the terms

of the Golden Sun Shareholders’ Agreement, Favor Jumbo, in consideration of HK$1 paid by SBI Macau, granted

to SBI Macau the right to require Favor Jumbo to purchase or procure the purchase of the entire equity interest

in Golden Sun and the entire amount of the shareholder’s loans owing by Golden Sun to SBI Macau (the “SBI

Macau Put Option”).

The SBI Macau Put Option purchase price shall be HK$99,465.77 per ordinary share in the share capital of Golden

Sun held by SBI Macau as at completion of the SBI Macau Put Option plus the face value of the entire amount of

the shareholder’s loan owing by Golden Sun to SBI Macau as at completion of the SBI Macau Put Option, and the

reserve as calculated in accordance with the terms of the Golden Sun Shareholders’ Agreement.

The SBI Macau Put Option can be exercised at any time on any business day during the period commencing from

the fi fth anniversary of 8 August 2008, the date of entering into the Golden Sun Shareholders’ Agreement and

ending on the day falling two months thereafter.

The directors of the Company considered that after the completion of the Golden Sun Disposal, the Group still

retains substantially all the risks and rewards of ownership of the Sale Shares. Therefore, the Group accounts

for Golden Sun as a wholly-owned subsidiary of the Group. The consideration of HK$130,000,000 received

has been recognised as liabilities and classifi ed under profi t guarantee liabilities (note 28), the loans payables

(note 29) and long-term payables (note 30) in the consolidated balance sheet. As the Group does not have the

unconditional rights to avoid settlement under the SBI Macau Put Option, the Group has to recognise the relevant

fi nancial liabilities at the amount of the present value of the estimated future cash outfl ow when it is required to

acquire the Sale Shares.

82


6. SEGMENT REPORTING

Segment information is presented by way of two segment formats: (i) on a primary segment reporting basis, by business

segment; and (ii) on a secondary segment reporting basis, by geographical segment.

a) Business segment

The Group’s operating business are structured and managed separately according to the nature of their operations and

the products and services provided. Each of the Group’s business segments represents a strategic business unit that

offers:

– Cruise leasing and management business: the leasing of cruise and the provision of management services to the

cruise.

– Travel business: the provision of travel-related agency services.

Cruise leasing and management Travel Consolidated

Period ended Year ended Period ended Year ended Period ended Year ended

31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

RevenueTurnover 118,000 95,901 509,254 7,853 627,254 103,754

Other revenue 225 184 4,917 72 5,142 256

Total revenue 118,225 96,085 514,171 7,925 632,396 104,010

ResultsSegment results (1,703 ) 32,035 2,707 (513 ) 1,004 31,522

Interest income 4,851 10,048

Gain on disposal of property,

plant and equipment 298 –

Gain on disposal of securities – 4,391

Gain on disposal of available- – 10,330

for-sale investment

Unallocated operating income 24,824 5,668

Unallocated operating expenses (98,569 ) (27,890 )

(Loss)/profi t from operations (67,592 ) 34,069

Finance costs (335 ) (1,675 )

Share of results of associates (170,292 ) (15,450 )


Income tax (859 ) (672 )


Balance Sheet At 31.12.2008 At 30.9.2007

AssetsSegment assets 95,394 119,204 72,175 1,432 167,569 120,636

Interest in associates 1,119,892 886,930

Unallocated assets 131,486 189,813

Consolidated total assets 1,418,947 1,197,379

LiabilitiesSegment liabilities 5,671 5,603 41,578 170 47,249 5,773

Unallocated liabilities 440,539 164,693

Consolidated total liabilities 487,788 170,466



6. SEGMENT REPORTING (CONTINUED)

a) Business segment (continued)

Cruise leasing

and management Travel Unallocated Consolidated

Period ended Year ended Period ended Year ended Period ended Year ended Period ended Year ended

31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Other information:

Amortisation of

intangible assets – – 215 – – – 215 –

Impairment loss on

– goodwill – – 609 – – – 609 –

– intangible assets – – 676 – – – 676 –

– other receivables 22,763 – – – – – 22,763 –

– interest in associates – – – – 18,900 – 18,900 –

Depreciation 9,142 7,325 837 20 3,480 1,365 13,459 8,710

Capital expenditure 117 25 7,305 1 5,964 5,311 13,386 5,337

b) Geographical segment

The Group’s business is managed on a worldwide basis, but participates in four principal economic environments. The

cruise leasing and management income is mainly derived from South China Sea, other than in Hong Kong. In Hong

Kong, the main business is the provision of travel-related agency services. The income from North America mainly

derived from sale of air tickets and tour packages.

In presenting information on the basis of geographical segment, segment revenue is based on the geographical location

of customers. Segment assets and capital expenditure are based on the geographical location of the assets.

South China Sea,

other than in

Hong Kong Hong Kong Macau North America Consolidated

Period Year Period Year Period Year Period Year Period Year

ended ended ended ended ended ended ended ended ended ended

31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007


Segment revenue

Turnover 118,000 95,901 5,121 7,853 – – 504,133 – 627,254 103,754

Segment assets 94,259 119,211 134,003 190,689 1,121,165 887,479 69,520 – 1,418,947 1,197,379

Capital expenditure 117 25 5,633 5,312 – – 7,636 – 13,386 5,337

84


7. TURNOVER

The principal activities of the Group are leasing and management of cruise and tourist-related business.

Turnover represents cruise leasing and management fee income and travel-related agency services fee income. The amount

of each signifi cant category of revenue recognised in turnover during the period/year is as follows:

Period ended Year ended

31.12.2008 30.9.2007

HK$’000 HK$’000

Cruise leasing and management fee income 118,000 95,901

Travel–related agency services fee income

– sale of air tickets 470,409 –

– travel and related service fee income 38,845 7,853

509,254 7,853

627,254 103,754

8. OTHER REVENUE AND OTHER NET INCOME


31.12.2008 30.9.2007

HK$’000 HK$’000

Other revenue

Interest income on bank deposits 4,851 10,197

Total interest income on fi nancial assets not at fair value through profi t or loss 4,851 10,197

Commission income 74 45

Dividend from available-for-sale investment – 1,133

Management fee income from an associate 5,919 4,534

Write back of trade payables# 3,858 –

Amortisation of fi nancial guarantee contract 18,900 –

Other income 1,215 63

34,817 15,972

# This amount represents write back of long-outstanding trade payables



8. OTHER REVENUE AND OTHER NET INCOME (CONTINUED)


31.12.2008 30.9.2007

HK$’000 HK$’000

Other net income

Gain on disposal of securities (note) – 4,391

Gain on disposal of available-for-sale investment – 10,330

Gain on disposal of property, plant and equipment 298 –

298 14,721

Note: During the year ended 30 September 2007, Better Talent Limited, an indirect wholly-owned subsidiary of the Company, as subscriber,

entered into a subscription agreement with an independent third party, China Star Entertainment Limited (“China Star”), a company

listed on the Stock Exchange, for the subscription of China Star’s zero coupon unsecured convertible bonds at the subscription price

of approximately HK$11.9 million. The convertible bonds were exercised and converted into ordinary shares of China Star and such

shares were subsequently disposed in the open market during the year ended 30 September 2007. The net proceeds received were

approximately HK$16.3 million.

9. (LOSS)/PROFIT BEFORE TAXATION

(Loss)/profi t before taxation is arrived at after charging/(crediting):

a) Finance costs


31.12.2008 30.9.2007

HK$’000 HK$’000

Interest expenses on other borrowings

wholly repayable within fi ve years – 1,675

Interest expenses paid to a related company 335 –

Total interest expenses on fi nancial liabilities not at fair value

through profi t or loss 335 1,675

b) Staff costs


31.12.2008 30.9.2007

HK$’000 HK$’000

Salaries, wages and other benefi t (including directors’ emoluments) 59,928 35,394

Contribution to defi ned contribution retirement plan 990 629

60,918 36,023

86


9. (LOSS)/PROFIT BEFORE TAXATION (CONTINUED)

c) Other items


31.12.2008 30.9.2007

HK$’000 HK$’000

Auditors’ remuneration

– audit services 1,267 837

– other services 590 110

Depreciation on owned fi xed assets 13,459 8,710

Gain on write off of a subsidiary under voluntary liquidation (13 ) –

Amortisation of intangible assets 215 –

Operating lease rentals

– properties 6,365 4,398

– plant and machinery 272 40

Net exchange loss/(gain) 546 (37 )

Cost of inventories# 36,044 17,044

Impairment loss on

– goodwill* 609 –

– intangible assets* 676 –

– other receivables*^ 22,763 –

– interest in associates* 18,900 –

# Included within administrative expenses

* These amounts are included in “other operating expresses” on the face of the consolidated income statement.

^ This represents impairment on debts due by a debtor which has been long-outstanding. The directors considered that the

amounts due could not be recovered. Therefore, full impairment has been made (note 24(d)).



10. INCOME TAX IN THE CONSOLIDATED INCOME STATEMENT

a) Taxation in the consolidated income statement represents:


31.12.2008 30.9.2007

HK$’000 HK$’000

Current tax-Hong Kong Profi ts Tax

– charge for the period/year 1,708 804

– over-provision in respect of prior years (25 ) –

1,683 804

Current tax-Overseas Profi ts Tax

– over-provision in respect of prior years (327 ) –

1,356 804

Deferred taxation relating to the origination and

reversal of temporary differences (note 32 (b)) (497 ) (132 )

859 672

On 26 June 2008, the Hong Kong Legislative Council passed the Revenue Bill 2008 and reduced corporate profi ts

tax rate from 17.5% to 16.5% which is effective from the year of assessment 2008/2009. Hong Kong Profi ts Tax is

calculated at 16.5% (2007: 17.5%) of the estimated assessable profi t for the period/year.

Taxation arising in other jurisdictions are calculated at the rates prevailing in the relevant jurisdictions.

b) Reconciliation between tax expense and accounting (loss)/profi t at applicable tax rates:


31.12.2008 30.9.2007

HK$’000 HK$’000


Notional tax on (loss)/profi t before taxation, calculated at the rates

applicable to (loss)/profi t in the countries concerned (10,495 ) 5,669

Tax effect of share of results of associates (28,098 ) (2,730 )

Tax effect of non-deductible expenses 9,607 3,976

Tax effect of non-taxable revenue (4,052 ) (9,280 )

Tax effect of unrecognised tax losses 32,944 3,319

Unrecognised temporary differences 1,881 (282 )

Tax effect on utilisation of previously unrecognised tax losses (576 ) –

Overprovision for tax in prior years (352 ) –

Tax charge 859 672

88


11. DIRECTORS’ REMUNERATION

Directors’ remuneration disclosed pursuant to Section 161 of the Hong Kong Companies Ordinance is as follows:

Salaries, allowances Retirement scheme Performance related

Directors’ fees and benefi ts in kind contributions incentive payment (note) Total Period ended Year ended Period ended Year ended Period ended Year ended Period ended Year ended Period ended Year ended

Name 31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007 31.12.2008 30.9.2007


Executive Directors

Yeung Hoi Sing, Sonny – – – – – – – – – –

Lee Siu Cheung (resigned on 1 June 2008) – – 360 889 8 12 187 – 555 901

Ma Ho Man, Hoffman

(appointed on 20 March 2007) – – 970 210 15 6 112 – 1,097 216


Choi Kin Pui, Russelle 129 100 – – – – – – 129 100

Independent Non-executive Directors

Luk Ka Yee, Patrick 129 100 – – – – – – 129 100

Yim Kai Pung 129 100 – – – – – – 129 100

Yeung Mo Sheung, Ann 129 100 – – – – – – 129 100

516 400 1,330 1,099 23 18 299 – 2,168 1,517

Note: The performance related incentive payment is determined by reference to the individual performance of the directors and approved by

remuneration committee.

12. INDIVIDUALS WITH HIGHEST EMOLUMENTS

The fi ve individuals with the highest emoluments, one (2007: one) is a director whose emoluments is disclosed in note 11. The

aggregate of the emoluments in respect of the other four (2007: four) individuals are as follows:


31.12.2008 30.9.2007

HK$’000 HK$’000

Salaries, allowances and benefi ts in kind 3,171 2,272

Performance related incentive payment 118 –

Retirement benefi t scheme contributions 52 45

3,341 2,317

The emoluments of the four (2007: four) individuals with the highest emoluments are within the following band:

Number of individuals


31.12.2008 30.9.2007

HK$Nil – HK$1,000,000 4 4



13. (LOSS)/PROFIT ATTRIBUTABLE TO EQUITY SHAREHOLDERS OF THE COMPANY

The (loss)/profi t attributable to equity shareholders of the Company includes a loss of approximately HK$28,657,000 (2007:

profi t HK$4,279,000) which has been dealt within the fi nancial statements of the Company.

14. DIVIDENDS

No interim dividend was paid during the period under review (2007: Nil). The Directors do not recommend any payment of a

fi nal dividend for the fi fteen months ended 31 December 2008 (2007: Nil).

15. (LOSS)/EARNINGS PER SHARE

a) Basic (loss)/earnings per share

The calculation of basic (loss)/earnings per share is based on the (loss)/profi t for the period/year attributable to equity

shareholders of the Company of approximately HK$238,304,000 (2007: profi t HK$2,314,000) and on the weighted

average number of 2,414,012,000 (2007: 2,174,642,000) shares in issue during the period/year.

b) Diluted (loss)/earnings per share

Dilutive (loss)/earnings per share equals to the basic (loss)/earnings per share as there were no potential dilutive ordinary

shares outstanding for the period/year presented.

90


16. PROPERTY, PLANT AND EQUIPMENT

Group

Furniture, fi ttings and Freehold land Leasehold Plant and offi ce Motor Motor and building Cruise improvements machinery equipment vehicles yacht Total HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Cost At 1 October 2006 – 93,600 2,796 9,853 3,923 230 – 110,402

Additions – – 2,798 – 938 1,601 – 5,337

Disposals – – (1,746 ) – (386 ) – – (2,132 )

At 30 September 2006 and

1 October 2007 – 93,600 3,848 9,853 4,475 1,831 – 113,607

Additions – – 59 – 713 784 4,700 6,256

Disposals (766 ) – (365 ) – (111 ) (230 ) – (1,472 )

Acquisition of subsidiaries 3,838 – 1,057 – 1,985 250 – 7,130

Write off of a subsidiary – – (226 ) – (113 ) – – (339 )

Exchange alignment (662 ) – (681 ) – (1,794 ) (185 ) – (3,322 )

At 31 December 2008 2,410 93,600 3,692 9,853 5,155 2,450 4,700 121,860

Accumulated depreciation At 1 October 2006 – 12,870 2,051 2,003 1,744 198 – 18,866

Charge for the year – 4,680 947 1,970 845 268 – 8,710

Written back on disposals – – (1,684 ) – (230 ) – – (1,914 )

At 30 September 2007 and

1 October 2007 – 17,550 1,314 3,973 2,359 466 – 25,662

Charge for the period 19 5,850 1,665 2,464 1,666 777 1,018 13,459

Written back on disposals – – (220 ) – (48 ) (230 ) – (498 )

Write off of a subsidiary – – (222 ) – (102 ) – – (324 )

Exchange alignment (14 ) – (512 ) – (1,479 ) (145 ) – (2,150 )

At 31 December 2008 5 23,400 2,025 6,437 2,396 868 1,018 36,149

Net book value At 31 December 2008 2,405 70,200 1,667 3,416 2,759 1,582 3,682 85,711

At 30 September 2007 – 76,050 2,534 5,880 2,116 1,365 – 87,945

The analysis of carrying amount of property is as follows:

At At

31.12.2008 30.9.2007

HK$’000 HK$’000

Outside Hong Kong

Freehold land 2,405 –



17. GOODWILL

Group

HK$’000

Cost

At 1 October 2006 and 30 September 2007 1,313

At 1 October 2007 1,313

Acquisition of subsidiaries (note 40(a)) 7,019

At 31 December 2008 8,332

Accumulated impairment losses

At 1 October 2006 and 30 September 2007 –

At 1 October 2007 –

Impairment loss (609 )

At 31 December 2008 (609 )

Carrying amount

At 31 December 2008 7,723

At 30 September 2007 1,313

Goodwill is allocated to the Group’s cash-generating units (“CGUs”) identifi ed according to business segment as follows:

At At

31.12.2008 30.9.2007

HK$’000 HK$’000

Cruise management CGU 1,313 1,313

Travel CGU 6,410 –

7,723 1,313

The recoverable amount of the cash-generating unit (“CGU”) is determined on value-in-use calculations. These calculations

use cash fl ow projections based on the fi nancial budgets approved by management covering a fi ve-year period. Cash fl ows

beyond the fi ve-year period are extrapolated using the estimated growth rates stated below. The growth rate does not exceed

the long-term average growth rate for the business in which the CGU operates.

Key assumptions used for value-in-use calculations:

Travel CGU Cruise management CGU

2008 2007 2008 2007

% % % %

– Growth rate 4 N/A zero 5

– Discount rate 11.8 N/A 5 5

92


17. GOODWILL (CONTINUED)

The discount rates refl ect specifi c risks relating to the relevant segment.

The goodwill of HK$7,019,000 was arising on the acquisition of 100% interest in Smart Class Enterprises Limited

(“Smart Class”) in July 2008. Based on the impairment tests performed, the carrying amount of the goodwill of HK$6,410,000

allocated to the travel CGU has been impaired by HK$609,000 as at 31 December 2008 because the market condition of the

travel agent business changed signifi cantly subsequent to the fi nancial crisis since the last quarter of 2008. The recoverable

amount of the cruise management CGU is higher than its carrying amount based on value-in-use calculations. Accordingly, no

impairment loss is recognised for the period (2007: Nil).

Management believes that any reasonably possible change in the key assumptions on which recoverable amount is based

would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cruise management

CGU.

18. INTANGIBLE ASSETS Trademark Client list Total HK$’000 HK$’000 HK$’000

Cost At 1 October 2006 and 30 September 2007 – – –

At 1 October 2007 – – –

Acquisition of subsidiaries (note 41(a)) 33,044 9,238 42,282

Exchange alignment (5,301 ) (1,482 ) (6,783 )

At 31 December 2008 27,743 7,756 35,499

Accumulated amortisation and impairment losses At 1 October 2006 and 30 September 2007 – – –

At 1 October 2007 – – –

Charge for the period – (215 ) (215 )

Impairment loss – (676 ) (676 )

At 31 December 2008 – (891 ) (891 )

Carrying amount At 31 December 2008 27,743 6,865 34,608

At 30 September 2007 – – –

The trademark and client list were purchased as part of the business combination of Smart Class. The amortisation charge

for the period is included in the “administrative expenses” in the consolidated income statement. The Group’s titles to these

intangible assets are not restricted and they are not pledged as securities for liabilities.



18. INTANGIBLE ASSETS (CONTINUED)

Trademark

The Group classifi ed the acquired trademark as an intangible asset with infi nite life in accordance with HKAS 38 Intangible

Assets. This is supported by the fact that the legal rights of the trademark are capable of being renewed indefi nitely at

insignifi cant cost and are therefore perpetual in duration. Based on the anticipated future fi nancial performance of the travel

CGU, the trademark is expected to generate positive cash fl ows indefi nitely. Under HKAS 38, the Group re-evaluates the

useful life of the trademark each year to determine whether events or circumstances continue to support the view of the

indefi nite useful life of the asset.

The trademark will not be amortised until its useful life is determined to be fi nite. Instead it will be tested for impairment annually

and whenever there is an indication that it may be impaired.

In accordance with HKAS 36 Impairment of Assets, the Group completed its annual impairment test for the trademark by

comparing its recoverable amount to its carrying amount as at 31 December 2008. The Group has conducted a valuation

of the trademark based on the value in use calculations. With reference to the valuations carried out by Roma Appraisal

Limited (“Roma”), an independent professional valuer, who has among their staff, fellow members of the Hong Kong Institute

of Surveyors, the recoverable amount of the trademarks is higher than its carrying value, therefore, no impairment loss is

recognized for the period.

The valuation of the trademark uses cash fl ow projections based on fi nancial estimates covering a fi ve-year period, the

expected sales deriving from the trademark in the travel CGU and a discount rate of 14.8%. The cash fl ows beyond the fi ve-

year period are extrapolated using a steady 4% growth rate. This growth rate does not exceed the long term average growth

rate for travel markets in which the Group operates. Management has considered the above assumptions and valuation and

also taken into account the business plan going forward.

Client list

The directors assessed that the client list having 15 years of useful lives. The Group has completed its annual impairment

test for the client list by comparing the recoverable amount of the client list to its carrying amount as at 31 December 2008.

The Group has conducted a valuation of the client list based on the value in use calculations With reference to the valuations

carried out by Roma the carrying amount of client list of HK$6,865,000 has been impaired by HK$676,000 because the

market condition of the travel agent business changed signifi cantly subsequent to the fi nancial crisis since the last quarter of

2008.

The valuation of the client list is based on the contributory charge method and uses cash fl ow projections based on fi nancial

estimates covering a fi ve-year period, the expected sales deriving from the client list in the travel CGU and a discount rate of

13.9%. The cash fl ows beyond the fi ve-year period are extrapolated using a steady 4% growth rate. This growth rate does not

exceed the long-term average growth rate for travel markets in which the Group operates. Management has considered the

above assumptions and valuation and also taken into account the business plan going forward.

94


19. INVESTMENTS IN SUBSIDIARIES

Company

At At

31.12.2008 30.9.2007

HK$’000 HK$’000

Unlisted shares, at cost 40,655 15,874

Deemed capital contributions (note 33) 63,000 63,000

Amounts due from subsidiaries 1,012,031 608,370

1,115,686 687,244

Less: Impairment loss# (42,881 ) –

1,072,805 687,244

# During the period ended 31 December 2008, after considering the poor operating performance of the relevant subsidiaries, the directors

are of the opinion that impairment loss of approximately HK$42,881,000 (2007: Nil) should be recognised.

The following list contains only the particulars of subsidiaries which principally affected the results, assets or liabilities of the

Group. The class of share held is ordinary unless otherwise stated.

All of these are controlled subsidiaries as defi ned under note 2(c) and have been consolidated into the Group fi nancial

statements.

Proportion of

Particulars ownership interest

Place of of issued Group’s Held

incorporation/ and paid up effective by the Held by Principal

Name of subsidiary operation share capital interest Company subsidiaries activities

Macau Success (Hong Kong) Limited Hong Kong 10,000,000 100 100 – Investment holding

shares of

HK$0.01 each

Access Success Developments Limited British Virgin Islands 1 share of US$1 100 – 100 Investment holding

Better Talent Limited British Virgin Islands 1 share of US$1 100 – 100 Investment holding

Capture Success Limited British Virgin Islands/ 100 shares of 55 – 55 Cruise leasing

South China Sea, US$1 each

other than in

Hong Kong



19. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

Proportion of





Favor Jumbo Limited British Virgin Islands 1 share of US$1 100 – 100 Investment holding

Golden Sun Profi ts Limited British Virgin Islands 20,000 shares of 100 – 100 Investment holding

US$1 each

Hover Management Limited Hong Kong/ 100 shares of 55 – 55 Provision of

South China Sea, HK$1 each cruise management

other than in services

Hong Kong

Macau Success Management Hong Kong 100 shares of 100 – 100 Provision of

Services Limited HK$1 each administration

services

Travel Success Limited Hong Kong 500,000 100 – 100 Travel agency

shares of

HK$1 each

Travel Success (Macau) Limited Macau 3 shares of 100 – 100 Travel agency

MOP750,000,

MOP749,000 and

MOP1,000

respectively

World Fortune Limited Hong Kong 1,000 shares of 100 – 100 Investment holding

HK$1 each

665127 British Columbia Ltd. Canada 10,000 common 80 – 80 Investment holding

shares with no

par value and 1,400

Class A preferred

shares with CAD0.01

par value (without

voting right)

96


19. INVESTMENTS IN SUBSIDIARIES (CONTINUED)

Proportion of





Jade Travel Ltd. (“Jade Travel Canada 7 common shares 80 – 80 Wholesale and retail

Ltd. (Canada)”) with no par value business of selling

airline tickets and

tour package

Jade Travel Ltd. (“Jade Travel Ltd. United States of 100 common shares 80 – 80 Wholesale and retail

(New York)”) America with no par value business of

selling airline tickets

and tour packages

Smart Class Enterprises Limited British Virgin Islands 50,000 ordinary shares 100 100 – Investment holding

of US$1 each

20. INTEREST IN ASSOCIATES

Group

At At

31.12.2008 30.9.2007

Note HK$’000 HK$’000

Share of net assets 154,634 425,696

Deemed capital contributions 33 63,000 63,000

Goodwill (b) 19,409 19,409

237,043 508,105

Amounts due from associates (c) 901,749 378,825

1,138,792 886,930

Less: Impairment loss (d) (18,900 ) –

1,119,892 886,930



20. INTEREST IN ASSOCIATES (CONTINUED)

(a) The following list contains only the particulars of associates, all of which are unlisted corporate entities, which principally

affected the results or assets of the Group:

Proportion of

ownership interest

Place of Particulars Group’s Held by

incorporation/ of issued and effective the Held by

Name of associate operation paid up capital interest Company a subsidiary Principal activities

Pier 16 – Entertainment Group Macau 2 shares of MOP24,000 49% – 49% Provision of

Corporation Limited and MOP1,000 management service

respectively for casino operation

Pier 16 – Management Limited Macau/ 2 shares of MOP24,000 49% – 49% Hotel operation

Hong Kong and MOP1,000

respectively

Pier 16 – Property Macau 100,000 shares of 49% – 49% Property holding

Development Limited MOP100 each

(b) Goodwill

Because goodwill included in the carrying amount of the interest in associates not separately recognized, it is not

tested for impairment separately by applying the requirements for impairment testing in HKAS 36 Impairment of assets.

Instead, the entire carrying amount of the interest in associates is tested for impairment as set out in note 20(d) below.

(c) The amounts due from associates are unsecured, interest free and have no fi xed terms of repayment. Their carrying

amounts are not materially different from their fair value.

(d) Impairment test for interest in associates

The Group completed its annual impairment test for interest in associates by comparing the recoverable amount of

interest in associates to its carrying amount as at 31 December 2008. The Group has engaged Roma to carry out a

valuation of the interest in associate as at 31 December 2008 based on the value-in-use calculations. The carrying

value of the interest in associates is written down by approximately HK$18.9 million (2007: Nil). This valuation uses cash

fl ow projections based on fi nancial estimates covering a fi ve-year period, and a discount rate of 12.9%. The cash fl ows

beyond the fi ve-year period are extrapolated using a steady 4% growth rate. This growth rate does not exceed the long-

term average growth rate for the casino and hotel industries in which the Group operates. Management has considered

the above assumptions and valuation and also taken into account the business plan going forward.

98


20. INTEREST IN ASSOCIATES (CONTINUED)

(e) The followings is summary of aggregate amounts of assets, liabilities, revenues, and results of the Group’s associates:

At At

31.12.2008 30.9.2007

HK$’000 HK$’000

Assets 3,654,950 2,748,553

Liabilities 3,339,370 1,879,786

Equity 315,580 868,767


31.12.2008 30.9.2007

HK$’000 HK$’000

Revenues 221,341 –

Loss (347,535 ) (33,428 )

21. DEPOSIT FOR ACQUISITION OF PROPERTIES

On 28 February 2008, Jade Travel Ltd., a 80% owned subsidiary of the Group entered into a sale and purchase agreement

to purchase of properties located in Richmond Hill, Ontario, Canada for a total consideration of approximately CAD2,364,000

(equivalent to approximately HK$15,265,000). The properties will be used as offi ce by the subsidiary. As at 31 December

2008, deposits of HK$2,290,000 had been paid and the outstanding balance of HK$12,975,000 was disclosed as capital

commitment in note 37. The purchase of the properties will be completed on or before 31 October 2009.

22. DEPOSIT FOR ACQUISITION OF A COMPANY

This represented a deposit of HK$60 million paid to上海永德投資有限公司 (“上海永德”), an independent third party, upon

signing of a letter of intent and a confi dentiality agreement on 10 January 2008 for the proposed acquisition by a wholly-owned

subsidiary of the Company of at least 10% and not more than 51% of the entire issued share capital of 重慶林科物業發展有

限公司, a 90% owned subsidiary of 上海永德. A letter agreement has been signed on 31 March 2009 to further extend the

long stop date to 30 September 2009.



23. INVENTORIES

Group

At At

31.12.2008 30.9.2007

HK$’000 HK$’000

Fuel oil 1,160 1,323

24. TRADE AND OTHER RECEIVABLES

Group Company

At At At At

31.12.2008 30.9.2007 31.12.2008 30.9.2007

Note HK$’000 HK$’000 HK$’000 HK$’000

Trade receivables (a), (b), (c) 21,731 996 – –

Other receivables 25,553 17,402 79 209

Less: Impairment loss (d) (22,763 ) – – –

2,790 17,402 79 209

Trade and other receivables 24,521 18,398 79 209

Prepayment and deposits 6,662 – 294 –

31,183 18,398 373 209

All of the trade and other receivables are expected to be recovered within one year.

(a) Aging analysis

Included in trade and other receivables are trade debtors with the following aging analysis as at the balance sheet

date:

Group Company

At At At At

31.12.2008 30.9.2007 31.12.2008 30.9.2007

HK$’000 HK$’000 HK$’000 HK$’000

Current 14,979 727 – –

31 to 60 days overdue 6,239 165 – –

61 to 90 days overdue 178 – – –

Over 90 days overdue 335 104 – –

21,731 996 – –

The Group normally allows a credit period of 60 days to customers of cruise leasing and management (2007: 30 days)

and 30 days to customers of travelling business (2007: 30 days).

100


24. TRADE AND OTHER RECEIVABLES (CONTINUED)

(b) Impairment of trade receivables

Impairment loss in respect of trade receivables are recorded using an allowance account unless the Group is satisfi ed

that recovery of the amount is remote, in which case the impairment loss is written off against trade receivables directly

(see note2(k)). As at 31 December 2008, there were no impairment loss on the trade receivables.

(c) Trade receivables that are not impaired

The aging analysis of trade receivables that are neither individually nor collectively considered to be impaired are as

follows:

Group

At At

31.12.2008 30.9.2007

HK$’000 HK$’000

Neither past due nor impaired 14,979 727

Past due but not impaired

– Less than 1 month past due 6,239 165

– 1 to 3 months past due 513 104

6,752 269

21,731 996

Receivables that were neither past due nor impaired relate to a wide range of customers for whom there was no recent

history of default.

Receivables that were past due but not impaired relate to a number of independent customers that have a good track

record with the Group. Based on past experience, management believes that no impairment allowance is necessary

in respect of these balances as there has not been a signifi cant change in credit quality and the balances are still

considered fully recoverable. The Group does not hold any collateral over these balances.

(d) Other receivables

Group

HK$’000

Movement in the impairment on other receivables



Impairment loss recognised on other receivables (note 9(c)) 22,763

At 31 December 2008 22,763



25. PLEDGED BANK DEPOSITS/BANK BALANCES

Group Company

At At At At

31.12.2008 30.9.2007 31.12.2008 30.9.2007

HK$’000 HK$’000 HK$’000 HK$’000

Cash and bank balances 59,106 19,314 664 541

Non-pledged bank deposits 7,569 181,405 6,645 180,504

Pledged bank deposits 6,762 751 5,996 –

73,437 201,470 13,305 181,045

Less: Pledged bank deposits (6,762 ) (751 ) (5,996 ) –

Cash and cash equivalents

in cash fl ow statement 66,675 200,719 7,309 181,045

26. TRADE AND OTHER PAYABLES

Group Company

At At At At

31.12.2008 30.9.2007 31.12.2008 30.9.2007

HK$’000 HK$’000 HK$’000 HK$’000

Trade payables 7,259 163 – –

Consideration received for partial disposal

of a subsidiary – 100,000 – –

Accrued charges and other payables 16,198 6,259 1,802 912

Amounts due to subsidiaries – – 64,135 50,747

Financial liabilities measured at amortised cost 23,457 106,422 65,937 51,659

The amounts due to subsidiaries are interest free, unsecured and without fi xed terms of repayment.

All of the trade and other payables are expected to be settled within one year.

102


26. TRADE AND OTHER PAYABLES (CONTINUED)

Aging analysis

Included in trade and other payables are trade creditors with the following aging analysis as of the balance sheet date:

Group Company

At At At At

31.12.2008 30.9.2007 31.12.2008 30.9.2007

HK$’000 HK$’000 HK$’000 HK$’000

Current 4,918 149 – –

31 to 60 days 881 1 – –

61 to 90 days 444 – – –

Over 90 days 1,016 13 – –

7,259 163 – –

27. DEFERRED INCOME

Deferred revenue comprises of a sign-up bonus for an on-line ticket processing system and is recognised as revenue in

accordance with the terms of the agreements.

28. PROFIT GUARANTEE LIABILITIES

HK$’000

Carrying amount



Profi t guarantee issued to SBI Macau during the period 45,500

At 31 December 2008 45,500

Current liabilities 12,892

Non-current liabilities 32,608

45,500

As mentioned in note 5(b) (iii), Favor Jumbo guaranteed that SBI Macau shall be entitled to a return of not less than HK$9.1

million (“Guaranteed Amount”) for each full fi scal year for a period of sixty successive months immediately after the date of

completion of the Golden Sun Disposal (the “Relevant Period”).

In the event the amounts received by SBl Macau from the distribution of the profi ts of Golden Sun for any fi scal year during

the Relevant Period falls short (“Shortfall”) of the higher of the return as stipulated in the Golden Sun Shareholder’s Agreement

(the “Return”) or the Guaranteed Amount (pro-rated, if necessary), Favor Jumbo shall pay to SBI Macau such Shortfall within

six months from the end of the relevant fi scal year during the Relevant Period.



28. PROFIT GUARANTEE LIABILITIES (CONTINUED)

If the aggregate of the Return and the Shortfall payments received by SBI Macau from Golden Sun and/or Favor Jumbo in

respect of the Relevant Period exceeds the total Guaranteed Amount (pro-rated, if necessary) for the Relevant Period (the

“Excess”), SBI Macau shall refund and pay to Favor Jumbo the lesser of (a) the aggregate amount of the Shortfall paid by Favor

Jumbo to SBI Macau during the Relevant Period; and (b) the Excess, within three months upon notice from Favor Jumbo the

amount payable by SBI Macau after the expiry of the Relevant Period.

29. LOANS PAYABLES

At At

31.12.2008 30.9.2007


Loans from minority shareholders

– Mrs. Yung Yuen Ping Kwok (i) 2,247 –

– SABC Holdings Ltd. (ii) 6,472 –

8,719 –

Loan from Maruhan (iii) 119,752 –

Loan from SBI Macau (iv) 39,486 –

167,957 –

(i) Mrs. Yung Yuen Ping Kwok is the minority shareholder of a 80% owned subsidiary of the Group, namely 665127 British

Columbia Ltd. The loan was arising upon the acquisition of Smart Class and its subsidiaries.

(ii) SABC Holdings Ltd. is the minority shareholder of a 80% owned subsidiary of the Group, namely 665127 British

Columbia Ltd. The loan was arising upon the acquisition of Smart Class and its subsidiaries.

(iii) The amount represented the shareholder’s loan of approximately HK$66,468,000 due by World Fortune to Golden Sun

taken up by Maruhan upon the completion of the World Fortune Disposal and further shareholder loan of approximately

HK$53,284,000 advanced by Maruhan to World Fortune pursuant to the World Fortune Shareholders’ Agreement as

disclosed in note 5(b)(ii) to the fi nancial statements.

(iv) Pursuant to a deed of assignment dated 8 August 2008, Favor Jumbo assigned the loan of approximately HK$39,486,000

due by Golden Sun to SBI Macau as disclosed in note 5(b)(iii) to the fi nancial statements.

All the above loans are unsecured, interest free and not expected to be settled within one year.

104


30. LONG-TERM PAYABLES

At At

31.12.2008 30.9.2007

HK$’000 HK$’000

Present value of liabilities of

– Maruhan Put Option (Note 5(b)(ii)) 142,035 –

– SBI Macau Put Option (Note 5(b)(iii)) 45,013 –

187,048 –

31. DUE TO A RELATED COMPANY

The amount due to a related company, which is an investment holding company benefi cially wholly-owned by Mr. Yeung Hoi

Sing, Sonny, a director and a controlling shareholder of the Company is unsecured, bearing interest at the rate of 4% per

annum and not expected to be settled within one year.

32. INCOME TAX IN THE CONSOLIDATED BALANCE SHEET

a) Current taxation in the consolidated balance sheet represents:

Group

Period Year

ended ended

31.12.2008 30.9.2007

HK$’000 HK$’000

Provision for Hong Kong Profi ts tax for the period/year 1,708 672

Provisional Profi ts Tax paid (1,694 ) –

14 672

Balance of Profi ts tax provision relating to prior years

– Hong Kong 936 289

– Overseas 18 –

968 961



32. INCOME TAX IN THE CONSOLIATED BALANCE SHEET (CONTINUED)

b) Recognised deferred tax (assets)/liabilities

The movements of deferred tax (assets)/liabilities during the period/year were as follows:

Group

Accelerated

depreciation

HK$’000

At 1 October 2006 215

Charged to the income statement (note 10(a)) (132 )

At 30 September 2007 83

At 1 October 2007 83

Arising from acquisition of subsidiaries (888 )

Credited to the income statement (note 10(a)) (497 )

Exchange alignment 195

At 31 December 2008 (1,107 )

At At

31.12.2008 30.9.2007

HK$’000 HK$’000

Net deferred tax assets recognsied on

the consolidated balance sheet (1,190 ) –

Net deferred tax liabilities recognised on

the consolidated balance sheet 83 83

(1,107 ) 83

c) Unrecognised deferred tax assets

Deferred income tax assets are recognised for tax loss carried forward to the extent that the realisation of the related tax

benefi t through utilisation against future taxable profi ts is probable. At 31 December 2008, the Group had tax losses of

approximately HK$103 million (2007: HK$86 million) that are available to carry forward indefi nitely for offsetting against

future taxable profi ts.

No deferred tax asset has been recognised in relation to tax losses as it is not probable that taxable profi t will be

available against which the tax losses can be utilised.

106


33. FINANCIAL GUARANTEE CONTRACT

HK$’000

Carrying amount


Fair value of fi nancial guarantee contract issued 63,000

At 30 September 2007 63,000

At 1 October 2007 63,000

Amortisation for the period (18,900 )

At 31 December 2008 44,100

Current liabilities 12,600

Non-current liabilities 31,500

44,100

At the balance sheet date, the Company gave a corporate guarantee to a bank in respect of syndicated loan facilities of HK$1,600

million (2007: HK$1,600 million) granted to an associate (note 38(a)). The maximum guarantee amount borne by the Company

was HK$860 million (2007: HK$860 million). Total loan outstanding for the syndicated loan facilities of the associate as at the

balance sheet date was HK$1,260 million (2007: HK$1,010 million).

Based on the valuation performed by an independent fi rm of valuer, the directors considered that the fair value of the fi nancial

guarantee contract was approximately HK$63,000,000 at the date of issuance of the fi nancial guarantee contract. The carrying

amount of the fi nancial guarantee contract recognised in the Group’s and the Company’s balance sheets was in accordance

with HKAS 39 and HKFRS 4 (Amendments).

34. SHARE CAPITAL

Notes Number of shares Nominal value

’000 HK$’000

Authorised:

Ordinary shares of HK$0.01 each

At 1 October 2006 and 30 September 2007 160,000,000 1,600,000

At 1 October 2007 and 31 December 2008 160,000,000 1,600,000

Issued and fully paid:

Ordinary shares of HK$0.01 each

At 1 October 2006 2,139,464 21,395

Allotment of consideration shares (a) 60,000 600

At 30 September 2007 2,199,464 21,995

At 1 October 2007 2,199,464 21,995

Allotment of subscription shares and

consideration shares (b), (c) 239,500 2,395

At 31 December 2008 2,438,964 24,390



34. SHARE CAPITAL (CONTINUED)

The movement in the issued share capital of the Company was as follows:

a) On 30 November 2006, World Fortune as purchaser entered into an agreement for the purchase of 12.25% equity

interest in and the related loan to Pier 16 – Property Development at an aggregate consideration of HK$200 million. The

consideration was settled partly by cash of HK$152 million and partly by the allotment and issue of 60 million shares

of the Company at an agreed issued price of HK$0.80 per share. The Company allotted and issued the consideration

shares on 28 February 2007.

b) On 1 October 2007, the Company entered into a subscription agreement with Maruhan as subscriber for the subscription

of 220 million shares of the Company at HK$1.062 each. The Company allotted and issued such shares on 26 October

2007. The gross proceeds from the issue were approximately HK$233.6 million and were used as general working

capital.

c) On 5 May 2008, the Company as purchaser entered into an agreement for the acquisition of the entire issued share

capital of Smart Class at an agreed consideration of CAD2.9 million (equivalent to approximately HK$22.6 million). The

consideration was settled by the allotment and issue of 19.5 million shares of the Company at an agreed issue price of

HK$1.16 per share. The fair value of the shares allotted on 31 July 2008 was HK$1.12 per share. The gross proceeds

from the issue were approximately HK$21.8 million, which represented the amount of consideration settled for the

acquisition.

35. EMPLOYEE RETIRE BENEFITS

a) Defi ned contribution retirement plan

The Group participates in a Mandatory Provident Fund Scheme (the “MPF Scheme”) under the Hong Kong Mandatory

Provident Fund Schemes Ordinance for employees employed under the jurisdiction of the Hong Kong Employment

Ordinance. The MPF Scheme is a defi ned contribution retirement plan administered by independent trustees. Under

the MPF Scheme, the employer and its employees are each required to make contributions to the plan at 5% of the

employees’ relevant income, subject to a cap of monthly relevant income of HK$20,000. Contributions to the plan vest

immediately.

b) Share option scheme

The Company participates in a share option scheme (the “Option Scheme”) for the purpose of providing incentives

and rewards to eligible participants who contribute to the success of the Group’s operations. Eligible participants of

the Option Scheme include the Company’s directors and other employees of the Group. The Option Scheme became

effective on 8 November 2004 and, unless otherwise cancelled or amended, will remain in force for 10 years from the

date of adoption of the Option Scheme, i.e. 20 August 2004. Under the Option Scheme, the directors of the Company

are authorised at their absolute discretion, to invite any employee, executive or offi cer of any member of the Group

or any entity in which the Group holds any equity interest (including any directors) and any consultant, agent, adviser,

vendor, supplier or customer who is eligible to participate in the Option Scheme, to take up options to subscribe for

shares of the Company (the “Share(s)”).

108


35. EMPLOYEE RETIRE BENEFITS (CONTINUED)

b) Share option scheme (continued)

There is no provision in the Option Scheme to require a grantee to fulfi ll any performance target or to hold the option for

a certain period before exercising the option, but the Company may at its absolute discretion from time to time provide

such requirements in the offer of grant of options.

The maximum number of Shares which may be issued upon exercise of all options to be granted under the Option

Scheme and any other share option schemes of the Company shall not in aggregate exceed 10 per cent. of the total

number of Shares in issue as at the date of adoption of the Option Scheme.

The Company may seek approval of the shareholders in general meeting for refreshing the 10 per cent. limit under the

Option Scheme save that the total number of Shares which may be issued upon exercise of all options to be granted

under the Option Scheme and any other share option schemes of the Company under the limit as “refreshed” shall not

exceed 10 per cent. of the total number of Shares in issue as at the date of approval of the limit. Options previously

granted under the Option Scheme and any other share option schemes of the Company (including those outstanding,

cancelled, lapsed in accordance with the other scheme(s) or exercised options) will not be counted for the purpose of

calculating the limit as “refreshed”.

Notwithstanding aforesaid in above, the maximum number of Shares which may be issued upon exercise of all

outstanding options granted and yet to be exercised under the Option Scheme and any other share option schemes of

the Company must not exceed 30 per cent. of the total number of Shares in issue from time to time.

The total number of Shares issued and to be issued upon exercise of the options granted to each participant (including

both exercised and outstanding options) in any 12-month period shall not exceed 1 per cent. of the total number of

Shares in issue.

The exercise price in respect of any particular option shall be such price as determined by the board of directors of the

Company in its absolute discretion at the time of the making of the offer but in any case the exercise price shall not be

less than the highest of (i) the offi cial closing price of the Shares as stated in the daily quotation sheets of the Stock

Exchange on the date of offer, which must be a business day; (ii) the average of the offi cial closing price of the Shares

as stated in the daily quotation sheets of the Stock Exchange for the fi ve business days immediately preceding the date

of offer; and (iii) the nominal value of a share.

The offer of a grant of share options must be accepted not later than 28 days after the date of offer, upon payment of a

consideration of HK$1 by the grantee. The exercise period of the share options granted is determined by the board of

directors of the Company, save that such period shall not be more than a period of ten years from the date upon which

the share options are granted or deemed to be granted and accepted.

As at the balance sheet date, no share options have been granted under the Option Scheme since its adoption.



36. RESERVES

Group

Attributable to equity shareholders of the Company Retained Capital Property profi ts/ Share Distributable redemption revaluation Exchange (accumulated Minority Total premium reserve reserve reserve reserve losses) Total interests equity HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

At 1 October 2006 612,516 52,333 976 187,065 – 52,331 905,221 40,304 945,525


shares (note 34(a)) 47,400 – – – – – 47,400 – 47,400

Profi t for the year – – – – – 2,314 2,314 13,958 16,272

Interim dividend declared

during the year – – – – – – – (4,279 ) (4,279 )

At 30 September 2007 659,916 52,333 976 187,065 – 54,645 954,935 49,983 1,004,918

At 1 October 2007 659,916 52,333 976 187,065 – 54,645 954,935 49,983 1,004,918

Allotment of subscription

shares (note 34(b)) 231,440 – – – – – 231,440 – 231,440


shares (note 34(c)) 21,645 – – – – – 21,645 – 21,645

Share issuance costs (4,216) – – – – – (4,216 ) – (4,216 )

Exchange differences

on translation of fi nancial

statements of

subsidiaries – – – – (4,235 ) – (4,235 ) (1,001 ) (5,236 )

Share of associates’ net loss

recognised directly in equity – – – (100,817 ) – – (100,817 ) – (100,817 )

Partial disposal of a subsidiary – – – – – – – – –

Acquisition of additional interests

in subsidiaries – – – – – – – 4,863 4,863

Dividend paid to minority

shareholders – – – – – – – (6,750 ) (6,750 )

Loss for the period – – – – – (238,304 ) (238,304 ) (774 ) (239,078 )

At 31 December 2008 908,785 52,333 976 86,248 (4,235 ) (183,659 ) 860,448 46,321 906,769

Reserves retained by

Company and subsidiaries 908,785 52,333 976 – (4,235 ) 2,481 960,340 46,321 1,006,661

Associates – – – 86,248 – (186,140 ) (99,892 ) – (99,892 )

At 31 December 2008 908,785 52,333 976 86,248 (4,235 ) (183,659 ) 860,448 46,321 906,769

Company and subsidiaries 659,916 52,333 976 – – 70,493 783,718 49,983 833,701

Associates – – – 187,065 – (15,848 ) 171,217 – 171,217

At 30 September 2007 659,916 52,333 976 187,065 – 54,645 954,935 49,983 1,004,918

110


36. RESERVES (CONTINUED)

Group (continued)

Nature and purpose of reserves

a) Share premium

The application of the share premium account reserve is governed by section 40 of the Companies Act 1981 of

Bermuda.

b) Property revaluation reserve

The amount represents the Group’s share of revaluation surplus of a casino held by an associate.

c) Exchange reserve

The exchange reserve comprises all foreign exchange differences arising from the translation of the fi nancial statements

of foreign operations. The reserve is dealt with in accordance with the accounting policies set out in note 2(t).

Company

Share Retained

premium profi ts Total

HK$’000 HK$’000 HK$’000

At 1 October 2006 612,516 67,649 680,165

Allotment of consideration shares (note 34(a)) 47,400 – 47,400

Profi t for the year – 4,279 4,279

At 30 September 2007 659,916 71,928 731,844

At 1 October 2007 659,916 71,928 731,844

Allotment of subscription shares (note 34(b)) 231,440 – 231,440

Share issuance costs (4,216 ) – (4,216 )

Allotment of consideration shares (note 34(c)) 21,645 – 21,645

Loss for the period – (28,657 ) (28,657 )

At 31 December 2008 908,785 43,271 952,056

Distributability of reserves

At 31 December 2008, the aggregate amount of reserves available for distribution to equity shareholders of the Company was

HK$43,271,000 (2007: HK$71,928,000).



37. COMMITMENTS

a) Capital commitments outstanding at 31 December 2008 not provided for in the fi nancial statements were as follows:

Group Company

At At At At

31.12.2008 30.9.2007 31.12.2008 30.9.2007

HK$’000 HK$’000 HK$’000 HK$’000

Authorised but not contracted for – – – –

Contracted but not provided for

– acquisition of properties (note 21) 12,975 – – –

– acquisition of plant and machinery 2,602 – – –

15,577 – – –

b) At the balance sheet date, the total future minimum lease payments under non-cancellable operating leases are payable

as follows:

Group Company

At At At At

31.12.2008 30.9.2007 31.12.2008 30.9.2007

HK$’000 HK$’000 HK$’000 HK$’000

Within one year 2,001 3,757 – –

In the second to fi fth years, inclusive 4,445 1,575 – –

6,446 5,332 – –

The Group lease certain offi ce premises under operating leases. The leases typically run for periods ranging from one to

two years. None of the leases includes contingent rentals.

38. CONTINGENT LIABILITIES

At the balance sheet date, the Company gave the following undertakings:

(a) a corporate guarantee for syndicated loan facilities of HK$1,600 million (2007: HK$1,600 million) granted to an associate

held by a wholly-owned subsidiary of the Company. The maximum guarantee amount borne by the Company was

HK$860 million (2007: HK$860 million) (note 33). The total loan outstanding for the syndicated loan facilities of the

associate at the balance sheet date was HK$1,260 million (2007: HK$1,010 million).

(b) a guarantee of HK$7,749,000 in favor of a bank for banking facilities of HK$7,749,000 granted to a subsidiary. The

maximum guarantee amount borne by the Company was HK$7,749,000. The directors do not consider it probable that

a claim will be made against the Company.

112


39. RELATED PARTY TRANSACTIONS

a) The Group had the following transactions with the related parties during the period/year:

Group


31.12.2008 30.9.2007


Travel service income received from

– an associate (i) (ii) 1,237 1,150

– key management (i) (ii) 302 641

Management fee income received from

– associates (i) (iii) 5,919 4,534

Interest expenses paid to a related company (iv) 335 –

Notes:

i) Mr. Yeung Hoi Sing, Sonny was the director of the associates during the year ended 30 September 2007 and the fi fteen months

ended 31 December 2008. The former director of the Company, Mr. Lee Siu Cheung, was the director of the said associates

during the twelve months ended 30 September 2007 and he resigned as the director of the Company and the said associates

on 1 June 2008. The director of the Company, Mr. Ma Ho Man, Hoffman, was appointed as the director of the said associates

in place of Mr. Lee Siu Cheung and continued to hold offi ce during the period from 1 June 2008 to 31 December 2008.

ii) The travel agent service fee was charged according to prices and conditions comparable to those offered to other customers.

iii) The management fee was charged on actual cost incurred by the Group for provision of management and technical services.

iv) The interest was charged at 4% per annum on the amount due to a related company, Star Spangle Corporation which is owned

by Mr. Yeung Hoi Sing, Sonny.

b) The outstanding balances with related parties at balance sheet date are as follows:

At At

31.12.2008 30.9.2007


Amounts due from associates 20(c) 901,749 378,825

Due to a related company 31 17,574 –



39. RELATED PARTY TRANSACTIONS (CONTINUED)

c) Key management personnel compensation

Compensation for key management personnel, including amounts paid to the Company’s directors as disclosed in note

11 and certain of the highest paid employees as disclosed in note 12 is as follows:

Group

Period Year

ended ended

31.12.2008 30.9.2007


Salaries and other short-term employee benefi ts 6,243 3,771

Retirement scheme contributions 90 63

Termination benefi ts 258 –

Total emoluments are included in

“staff costs” 9(b) 6,591 3,834

d) On 1 December 2008, the Company as borrower entered into an unsecured term loan facility agreement (the “Facility

Agreement”) with Mr. Yeung as lender. Pursuant to the Facility Agreement, Mr. Yeung provided a facility of up to HK$200

million (the “Loan Facility”) to the Company. The rate of interest on the entire principal amount drawn and outstanding

under the Loan Facility was the prime rate quoted for Hong Kong dollars loans by The Hongkong and Shanghai Banking

Corporation Limited. The Loan Facility was available to the Company during the period from 1 December 2008 until

whichever is the earlier of (i) the date falling 1 month before the fi nal repayment date, ie. on or before 30 June 2010; and

(ii) the date on which the Loan Facility is reduced to zero. On 14 April 2009, the Company as borrower and Mr. Yeung

as lender also entered into an agreement to increase the Loan Facility up to HK$290 million. In addition, Mr. Yeung

undertakes not to demand an early repayment of the loan and all other sums owing to Mr. Yeung before 30 June 2010.

In the opinion of the directors, the borrowing of the Loan Facility was for the benefi t of the Company and on normal

commercial terms where no security over the assets of the Company was granted.

40. PLEDGE OF ASSETS

a) As at 31 December 2008, the Group pledged the time deposits of approximately HK$6.8 million (2007: HK$0.8 million)

to certain banks for bank facilities of approximately HK$8.4 million (2007: HK$0.8 million) granted to the Group.

b) As at 31 December 2008 and 2007, World Fortune pledged all of its shares in Pier 16 – Property Development to a bank,

for and on behalf of the syndicate of lenders, in respect of the syndicated loan facilities granted to Pier 16 – Property

Development.

114


41. BUSINESS COMBINATION

a) On 31 July 2008, the Group acquired the entire issued share capital of Smart Class for a consideration of approximately HK$22.6

million from Star Spangle Corporation, a company benefi cially wholly-owned by Mr. Yeung. Smart Class is an investment holding

company and is indirectly interested in 80% equity interest in a number of travel agency companies located in Canada and the

United States of America (“US”) (collectively “Jade Travel Group”). Jade Travel Group has offi ces located in Vancouver, Calgary,

Toronto and Montreal in Canada and New York in US and is engaged in the wholesale and retail of airline tickets and tour

packages.

Smart Class and its subsidiaries contributed revenue of approximately HK$504 million and profi t of approximately

HK$3.6 million to the Group for the period between the date of acquisition to 31 December 2008.

If the acquisition had been completed on 1 October 2007, the Group revenue for the period would have been

approximately HK$1,653.8 million, and loss for the period would have been approximately HK$36.4 million. The pro

forma information is for illustrative purposes only and is not necessarily an indication of revenue and results of operations

of the Group that actually would have been achieved had the acquisition been completed on 1 October 2007, nor is it

intended to be a projection of future results.

Details of net assets acquired and goodwill are as follows:

HK$’000

Purchase consideration

Fair value of the 19,500,000 consideration shares

at the closing market price of HK$1.12 per share

at the date of completion 21,840

Direct costs relating to the acquisition 2,941

Total purchase consideration 24,781

Less: Fair value of net identifi ed assets acquired (17,762 )

Goodwill (Note) 7,019

Note: The goodwill represents the benefi ts of enhanced effi ciency and the expected synergies arising from interaction between the

Group’s existing travel business in Hong Kong and the travel agent business of Smart Class in Canada and US.



41. BUSINESS COMBINATION (CONTINUED)

a) (continued)

The consolidated assets and liabilities of Smart Class as of 31 July 2008 were as follows:

Acquiree’s

carrying amount Fair value

before combination adjustment Fair value

HK$’000 HK$’000 HK$’000

Property, plant and equipment 5,460 1,670 7,130

Client list – 9,238 9,238

Trademark 22,845 10,199 33,044

Trade and other receivables 29,961 (15 ) 29,946

Tax recoverable 1,338 – 1,338

Deferred tax assets 1,456 – 1,456

Trade and other payables (35,454 ) 40 (35,414 )

Due to a related company (20,585 ) – (20,585 )

Loans from minority shareholders (10,385 ) – (10,385 )

Deferred income (561 ) – (561 )

Tax payable (18 ) – (18 )

Deferred tax liabilities – (568 ) (568 )

Cash and cash equivalents 8,004 – 8,004

Total net assets 2,061 20,564 22,625

Shared by minority shareholders (4,863 )

Net assets acquired 17,762

b) Analysis of the net cash infl ow on acquisition of subsidiaries:

HK$’000

Direct costs relating to the acquisition paid in cash (2,941 )

Cash and cash equivalents in subsidiaries acquired 8,004

Net cash infl ow on acquisition of subsidiaries 5,063

116


42. WRITE OFF OF A SUBSIDIARY UNDER VOLUNTARY LIQUIDATION

HK$’000

Net liabilities written off:

Property, plant and equipment 15

Trade and other receivables 41

Trade and other payables (69)

Fair value of net liabilities (13)

An analysis of the net outfl ow of cash and cash equivalents in respect of the write off as follows:

HK$’000

Cash and cash equivalents –

43. POST BALANCE SHEET EVENTS

On 14 April 2009, the Company as borrower and Mr. Yeung as lender also entered into an agreement to increase the Loan

Facility up to HK$290 million. In addition, Mr. Yeung undertakes not to demand an early repayment of the loan and all other

sums owing to Mr. Yeung before 30 June 2010.

In the opinion of the directors, the borrowing of the Loan Facility was for the benefi t of the Company and on normal commercial

terms where no security over the assets of the Company was granted.

44. COMPARTIVE FIGURES

As a result of adopting HKFRS 7, Financial instruments: Disclosures, and the amendments to HKAS 1, Presentation of fi nancial

statements: Capital disclosures, certain comparative fi gures have been adjusted to conform with changes in disclosures in

the current year and to show separately comparative amounts in respect of items disclosed for the fi rst time in 2007. Further

details of these developments are disclosed in note 4.


Five-year Financial Summary

RESULTS

Fifteen months

ended

31 December Year ended 30 September

2008 2007 2006 2005 2004

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Turnover:

Continuing operations 627,254 103,754 103,530 100,905 61,564

Discontinued operations – – – – 130,392

627,254 103,754 103,530 100,905 191,956

(Loss)/profi t before taxation (238,219 ) 16,944 48,531 31,783 29,966

Income tax (859 ) (672 ) (372 ) – (642 )

(Loss)/profi t for the period/year (239,078 ) 16,272 48,159 31,783 29,324

Attributable to:

Equity shareholders of the Company (238,304 ) 2,314 28,380 12,291 15,442

Minority interests (774 ) 13,958 19,779 19,492 13,882

(Loss)/profi t for the period/year (239,078 ) 16,272 48,159 31,783 29,324

(Loss)/earnings per share

– Basic (9.87 HK cents ) 0.11 HK cents 1.41 HK cents 0.66 HK cents 0.98 HK cents

– Diluted (9.87 HK cents ) 0.11 HK cents N/A N/A N/A

ASSETS AND LIABILITIES

Fifteen months

ended

31 December Year ended 30 September

2008 2007 2006 2005 2004

HK$’000 HK$’000 HK$’000 HK$’000 HK$’000

Total assets 1,418,947 1,197,379 978,395 712,094 137,549

Total liabilities (487,788 ) (170,466 ) (11,475 ) (31,360 ) (39,636 )

Minority interests (46,321 ) (49,983 ) (40,304 ) (31,235 ) (11,743 )

Total equity attributable to

equity shareholders

of the Company 884,838 976,930 926,616 649,499 86,170

* For identifi cation purpose only 僅供識別

MACAU SUCCESS LIMITED 澳門實德有限公司

Website 網頁 : www.macausuccess.com

*

澳門實德有限公司*MACAU SUCCESS LIMITED

(Incorporated in Bermuda with limited liability)

Stock Code 股份代號：00487

(於百慕達註冊成立之有限公司)

(1 October 2007 to 31 December 2008)

(二零零七年十月一日至

二零零八年十二月三十一日)

MA

CA

U SU

CC

ESS LIMIT

ED 澳門實德有限公司

AN

NU

AL R

EPOR

T 2008

年報

*

Documents

MACAU SUCCESS LIMITED 澳門實德有限公司 · of Hong Kong, Guangdong and Macau in February 2009 had proposed to expand Shenzhen’s IVS to the entire Guangdong province. Such